Gibbons v. District of Columbia (1886)
Religious Tax Exemptions: Property Taxes
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Should property owned by a religious organization, even if that property is used for commercial rather than religious purposes, be exempt from the same taxes as property which is used for religious purposes?
Background Information
A federal law provided for the collection of property taxes in the District of Columbia and allowed an exemption for "church buildings and grounds actually occupied by such buildings." However, if any portion of any building or grounds were used for commercial purpose, that portion would be subject to the standard tax.
Some land owned by St. Patrick's Church was being left open, rather than used directly by the congregation, so that the church might receive income from the sale of lease of that portion of the property. In 1881 some of that land was leased to private individuals and the proceeds went to pay off church debts and build a new church. Starting in 1880 taxes were assessed, but never paid
Court Decision
The Supreme Court readily conceded that open lots for the purpose of making a church more beautiful or enjoyable could reasonably remain exempt from taxation, but noted that that was definitely not the case here. The record made it clear that the lots in question were left open for only one purpose: to secure income. This allowed them to be taxed under the law.
Furthermore, the Supreme Court found that taxing property owned by religious organizations, but used for commercial rather than religious purposes, was not unconstitutional. Congress is free to exempt or not exempt classes of property from taxation or even tax them at a lower rate.
Significance
With this decision the Supreme Court made it clear that governments have wide latitude when it comes to creating or not creating exemptions to general taxes. Tax exemptions are not required, even when the property in question is religious.
Further Information
Back To: Court Decisions on Religious Liberty (main page)
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