Taxation of Churches



Taxation of Churches

Introduction

In the United States alone, $71 billion is lost annually because Churches and other religious institutes are not taxed on the donations they receive (Smith, 2012). If taxes are applied on these institutions, the additional revenue generated in the United States alone is more than the GDP of most countries. There are different opinions on this topic. Economic advisors and government agencies are usually in favor of taxing the donations given to churches. They claim that since this is the only source of revenue, it should be marked.

On the other hand, there are people believe that since the only source of revenue for churches are donations, and since these donations are used for either the church or for poor people, it should be exempted from taxation,

Discussion

Churches in the United States are exempted from paying taxes because it can limit the number of people who would practice their religion. Since they are conducting a social activity, they work is applauded by exempting them from taxes. Another reason why they are exempted from taxes is because the donations are like gifts and it would be unjust to tax a gift. By not taxing Churches, the state forms a relationship with the Church. This relation will end if they are taxed (www.latimes.com, 2008).

Chances for Fraud

Since Churches are not taxed, there is a view that they do not record their revenues and its sources in a proper manner. This is because when an organization does not have to pay any tax they usually do not consider maintaining proper books of account. This can lead to cases of fraud as people might be able to get off with some money without the priests coming to know.

Taxation helps solves this issue as Churches will be forced to pay taxes. This ...