Action Alert

Tell Wisconsin legislators not to give churches preferential tax treatment

 

The Wisconsin Legislature has introduced two bills intended to give preferential tax treatment to religious institutions, and your representatives need to hear your opposition.

Churches are lobbying the Wisconsin Legislature to create a special property tax exemption that removes more property from the tax rolls. The Archdiocese of Milwaukee has registered in support of these two bills, Assembly Bill 771 and Senate Bill 726, which would allow churches to become commercial landlords as long as they are renting their property to private schools or nonprofit entities. Please use our automated system below to contact your legislators today and tell them to oppose these bills.

The bills single out property owned by a “church or religious association or institution” for tax exemption, even if the church profits off of the rental. Other nonprofit entities in Wisconsin are excluded from receiving the same benefit. This bill would allow churches and religious nonprofits, but not secular nonprofits, to operate tax-exempt rental properties for the purpose of generating income.

Current law allows property owned by a nonprofit to be tax exempt if it is rented to another nonprofit only in narrow circumstances. To be exempt, the nonprofit landlord must use the rental income for either maintenance costs or to pay debt related to the construction of the leased property. As the city of Milwaukee has pointed out, the current law ensures that tax-exempt organizations do not become “real estate investors.”

More importantly, the bills are unconstitutional. The Establishment Clause of the First Amendment prohibits the government from giving preferential tax treatment to religious entities. The Supreme Court struck down special tax exemptions targeted at churches in the case Texas Monthly Inc. v. Bullock. Wisconsin’s Constitution, Article VIII, § 1, also requires “uniform” real estate taxation. Because only churches would benefit from the law (and not all nonprofits), the bill would fail scrutiny under both the U.S. and Wisconsin Constitutions.

The city of Milwaukee estimates that it would lose an additional $6.7 million to its tax base, which would result in more than $175,000 reduction in tax revenue each year. Of course, if the exemption is added, many more churches may seek to become commercial landlords.

The impact on taxation of other communities is not known. With the expansion of voucher schools across Wisconsin, churches may seek to take advantage and acquire new properties for the purpose of renting them to pop-up voucher schools. Tell your legislators to oppose these unconstitutional bills!

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