Study challenges tax exemption for religious institutions

TAMPA, Fla. — How much money does the U.S. government forgo by not taxing religious institutions? According to a University of Tampa professor, perhaps as much as $71 billion a year.

Ryan Cragun, an assistant professor of sociology, and two students examined U.S. tax laws to estimate the total cost of tax exemptions for religious institutions — on property, donations, business enterprises, capital gains and “parsonage allowances,” which permit clergy to deduct housing costs.

Cragun and his co-authors — Stephanie Yeager and Desmond Vega — examined federal tax exemption laws, and some state and local laws, specifically in their home state of Florida. They conclude:

• States bypass an estimated $26.2 billion per year by not requiring religious institutions to pay property taxes.
• Capital gains tax exemptions for religious institutions may be as much as $41 million a year.
• U.S. clergy may claim as much as $1.2 billion in tax exemptions annually via the parsonage allowance.