- The Supreme Court will determine whether Catholic Charities should get a religious tax exemption. The Wisconsin Supreme Court previously ruled that the organization is not operated primarily for religious purposes.
- The state of Wisconsin has an unemployment tax exemption for religious organizations, but Catholic Charities does not receive it.
- The Supreme Court will determine whether the state violates the First Amendment by denying the organization the exemption.
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The Supreme Court will hear oral arguments next week in a case that could change the way states tax certain religious nonprofits. The case revolves around a Wisconsin Supreme Court ruling that determined Catholic Charities is not operated primarily for religious purposes.
The state of Wisconsin has a tax exemption for religious organizations that are “operated, supervised, controlled, or principally supported by a church or convention or association of churches” and are also “operated primarily for religious purposes.” Organizations that fall into that category do not have to pay state unemployment taxes.
The Wisconsin Supreme Court ruled that although the Catholic diocese controls Catholic Charities, it should not receive the exemption because its activities are not “typical” religious activities and are not operated primarily for religious purposes. In making the determination, it said Catholic Charities serves and employs non-Catholics, it does not attempt to “imbue program participants with the Catholic faith,” and its services to the poor and needy are also provided by secular organizations.
The justices will answer two questions:
- Does a state violate the First Amendment by denying a religious organization a tax exemption because the organization does not meet the state’s criteria for religious behavior?
- In addressing federal constitutional challenges, may state courts require proof of unconstitutionality “beyond a reasonable doubt?”
Attorneys for the Wisconsin Labor and Industry Review Commission argued that the First Amendment does not require the state to create a religious exemption for organizations on their taxes. They said their standard is reasonable—to receive an exemption, the organization must conduct worship services, religious outreach, ceremony, or religious education.
They also pointed to Catholic Charities’ subsidiaries, which provide services like job placement, coaching and training. The nonprofit and its local subsidiaries receive millions of dollars annually in public grants to reduce homelessness and operate shelters in cities nationwide.
Lawyers for Catholic Charities said the organization is carrying out a religious mission and that all its works, even those that may be secular, like helping the poor, are a sign of the charity of Christ. It stated its mission is to “carry on the redeeming work of our Lord by reflecting gospel values and the moral teaching of the church.”
The justices will hear oral arguments in the case Monday, March 31. They will release a decision before they break for summer recess in late June.
