Governments at all levels—federal, state, and local— exempt from time to time charitable organizations from the obligation of paying taxes. Churches, for example, are often exempted from paying property taxes with respect to property they own. Since these exemptions arguably amount to a benefit conferred by governments on religious organizations, they have been the basis for challenges under the establishment clause of the first amendment. Texas Monthly involved one such challenge. In the mid-1980s, Texas passed a law exempting religious periodicals from sales and use taxes. A nonreligious magazine, Texas Monthly, argued that the exemption violated the establishment clause. Justice William Brennan, writing for the Court’s plurality, agreed that the exemption amounted to an unconstitutional establishment of religion. Justices Harry Blackmun and Sandra Day O’Connor concurred in this judgment.
As a preliminary matter, the Court considered whether Texas Monthly had standing to challenge the tax exemption. The state of Texas argued that it did not, since any relief that might plausibly be granted in the case would not amount to a refund of tax payments to the magazine. The Supreme Court, though, declined to rule on the issue of what remedy might follow a declaration that the tax exemption was unconstitutional. It was enough for standing that a live controversy existed concerning the magazine’s claim for a refund.
After concluding that Texas Monthly magazine had standing to argue the unconstitutionality of the Texas statute, Justice Brennan turned to the establishment clause issue. According to his opinion, the constitutional defect in the Texas law did not reside in the mere fact of the tax exemption being awarded a religious publisher. Previously, in Walz v. Tax Commission (397 U.S. 664, 1970), the Court had upheld a property tax exemption as applied to church property. But unlike the exemption at issue in Walz, which applied to a variety of charitable uses, the exemption in Texas Monthly applied only to religious periodicals. The law’s defect was that it accorded favorable tax treatment to religious periodicals and only those.
The state of Texas argued in the case that the tax exemption was intended to accommodate the free exercise of religion, but the Court rejected this contention. Such exemptions require, at a minimum, according to the Court, a demonstration that a particular law actually burdens the free exercise of religion. In this case, the Court found no evidence that any believers had religiously based scruples against the payment of sales or use taxes for religious periodicals. Accordingly, it concluded that the tax exemption was not a permissible accommodation of religious belief or practice, but an impermissible form of favoritism toward religion not allowed by the establishment clause.
Justice Brennan explained on behalf of the plurality that the decision in the case was not intended to suggest that only accommodations of religion required by the free exercise clause were permitted by the establishment clause. Accommodation of religion would generally be permissible if aid provided to religious believers was also provided to a broad range of secular and religious recipients. Moreover, accommodation would be permitted when it removed an obstacle created by government to an individual’s choice to engage in conduct protected by the free exercise clause. However, an accommodation might be prohibited if it required the imposition of a substantial burden on others as the cost of accommodating religious believers.
Justice Scalia, in an opinion joined by Chief Justice Rehnquist and Justice Kennedy, dissented from the judgment in the case. He argued that tax exemptions for religious entities were a long-standing practice and that nothing in the text of the Constitution, the decisions of the Court, or ‘‘the traditions of our people’’ supported the majority’s conclusion.
In a subsequent decision, the Supreme Court revisited the issue of tax exemptions for religious organizations. In Swaggart Ministries v. California Board of Equalization (493 U.S. 378, 1990), Justice O’Connor wrote for a now unanimous Court. This time, relying in part on the Texas Monthly decision, the Court held that a California law taxing retailers for the sale and use of certain personal property did not violate the free exercise rights of a religious organization involved in such sales or amount to an impressible establishment of religion.
TIMOTHY L. HALL
References and Further Reading
Cases and Statutes Cited
See also Establishment Clause Doctrine: Supreme Court Jurisprudence; Sherbert v. Verner, 374 U.S. 398 (1963); Tax Exemptions for Religious Groups and Clergy; Walz v. Tax Commission of City of New York, 397 U.S. 664 (1970)