Churches should NOT be tax exempt except..

[Xithras]

21. The problem is the 1st Amendment

The Supreme Court actually addressed this in 1970. The problem is that the 1st Amendment clearly prohibits the government from passing any laws to limit or restrict religion, and the Supreme Court has typically only allowed religious infringements when they occur within the context of a government agency (e.g. no prayer in school...a government facility), or when they cause direct harm to others. When the Supreme Court addressed the question of tax deductions for churches, they found that BOTH taxing and not taxing churches could be defined as interfering with religion, but that taxing it had MORE of an impact because it limited the power of churches by reducing their revenue streams. By giving the government the ability to decide how much revenue a church gets to keep, you are giving the government authority over the church. That's a 1st Amendment violation.

The court ruled that giving them a tax exemption was also government interference, but that it was less interference than taxing them. Basically, it was a "lesser of two evils" finding.

If the federal government tried to tax the churches today, the churches could use the Walz vs. Tax Commission of the City of New York findings to try and overturn any laws that Congress passed to impose them. It would likely go back to the Supreme Court again and, given their recent HL ruling, I wouldn't hold my breath hoping that they'd overturn their previous decision.