Christian Education: Tax Exemption vs. the Whole Counsel of God

By David Chilton Biblical Educator, Vol. 2, No, 11 (November 1980)

In the eighth century B.C., a king’s spy reported on the activities of a “subversive” prophet. After receiving further orders, the agent confronted the prophet and ordered him out of the country. This is not particularly surprising: governments have always had secret agents. The shocker is that the government’s man was the high priest of Israel, and the man he threatened was a true prophet of God (see Amos 7). The church of eighth-century Israel was completely dominated by the state—so much so that when Amos offended the state by his call to return to God’s law, a church official was deputized to silence him.

This is astounding. A minister as the ancient equivalent of a CIA agent? How could this be? And if it was true then, could it happen today? Well, maybe in Communist countries, we reassure ourselves. Not in America, “the land of the free” (a phrase which, these days, is about as true as the next line: “home of the brave”). Here we have separation of church and state. We have the First Amendment. No church in America is a Department of State… right? Wrong. We are becoming a nation of state churches.

Consider the case of a prominent evangelical church—let’s call it the “Free Church”—where the pastor is legitimately considered one of the most gifted Bible teachers in the country. He is a theological and political conservative, a Calvinist whose exposition on Romans 9 is better than that of Charles Hodge. What more could a church ask for? Incredibly, the church has a serious problem: it is enslaved to the state. Here’s how it happened.

The Free Church recently constructed a beautiful new building, at a seven-figure price. Naturally, they didn’t have the money, so they went into debt—mistake No. 1. “The borrower is servant to the lender” (Prov. 22:7); the church is no longer really “free.” But there’s more. To help finance the debt, the Free Church leaders asked the members to purchase interest-bearing notes, redeemable after a specified time, to be repaid out of the future receipts of the church. (This common practice, incidentally, is specifically prohibited by Scripture—Deut. 23:19-20—but then the word “Free” in the church’s name ought to stand for something.)

Now comes the sticky part. Every year, the church files an innocent-looking form with the State of California, amounting to an annual request for tax exemption. The state requires that any church receiving such exemption must not attempt “to influence legislation or any ballot measure.” For violating this mandate, some churches have already had their property confiscated. The Free Church officers are aware of this problem, and are taking definite action: bowing, scraping and kissing up. The pastor doesn’t preach against abortion, ERA, homosexuality, ungodly taxation or inflationary banking policies. He can’t afford to: his beautiful, heavily mortgaged temple might get taken away.

Or at least they could lose their tax exemption, and it’s hard enough getting people to donate now—what would happen if the donors couldn’t claim deductions? The church’s receipts would drop. And if the cash flow stopped, the church wouldn’t be able to pay its debts to the bank and the usurious church members. Then the church would default, go bankrupt, and lose the property anyway. So the pastor keeps quiet. The whole counsel of God is not preached. The church of Jesus Christ is enslaved. Of course, the pastor does have some freedom—all slaves do, within limits. But the Master defines the limits of the slave’s freedom. Where the state defines the church and its legitimate functions, there you have a state church.

Of course this is not how the preachers of the eighth century B.C. were muzzled, but the result was the same. The priests and prophets found it expedient to follow state prescriptions for the exercise of their ministry. Therefore, the presence of Amos was irritating, on two counts. First, Amos called them back to the law of God, and they were shamed and convicted of their sin. Second, they knew that the preaching of God’s word would anger the king: he just might lump them together with Amos, and revoke their tax exemption, or whatever. Thus, to protect their position and sear their consciences, they had to oppose Amos.

But this could not happen without severe consequences. First (8:7-10), Amos warned of national disaster (earthquake, flood, etc.), which had been promised in the law as necessary results of cultural apostasy. Because God is Lord of all, the ethical standing of a people will eventually be reflected in their environmental conditions. The earth experienced tremendous physical and economic blessings in the two centuries or so after the Reformation. And, as we have rejected the Reformation message, our environment has been increasingly polluted. In Biblical terms, the earth is “spewing us out” for our rejection of God’s law (Lev. 18:24-28). Routinely, the state churches receive “comforting” and “how-to-cope” sermons in periods of disaster—but only rarely (and then vaguely) do the pastors instruct the people about the causes of disaster, which are often related to the apostasy of those who claim to be God’s people.

The second consequence of apostasy, however (8:11-14), was to be even more severe: a famine, not of bread or water only, “but of hearing the words of the Lord.” God’s response to those who neglect His word is to simply deprive them of it. Without revelation, there is no hope, for the individual or for his culture. Those who acknowledge the state’s authority to define the faith, Amos says, “shall fall, and never rise again.” Note well: It is not the oppressive acts of godless governments that cause the famine, but the flight of those who claim to serve God. Last January, a group of Christian leaders issued a “Christian Declaration,” denouncing the evils of the state in terms of Biblical law.

A prominent, “born-again,” socialistic Senator from the Northwest was outraged at the audacity of these Christians in attacking his god. He and other statists threatened the believers that, unless they backed down, the tax-exempt status of their movement would come under close scrutiny. That’s all it took. Faster than you can say “Onward, Christian Soldiers,” the reformers dropped their little manifesto. Out the window went the word of God and Christian reconstruction, but the church property was saved. And so the famine spreads.

What then should the Christian school and church do about the tax exemption problem? After all, shouldn’t Christian organizations be free from taxes and the controls they involve? Yes—but so should every institution. There is no Biblical justification for taxing institutions, although individuals may be taxed. Furthermore, tax exemption is increasingly being used by the state to bludgeon Christians into submission. I don’t recommend it, but a church that paid taxes (i.e., bribes) would probably be more free to speak out than many untaxed, regulated churches. And you thought it was a simple issue.

My point here is not to bring massive guilt on any church or school that receives tax benefits. If you are already in that position, you’re in good company—but you also need to think about the problem. Tax-free institutions are being judged in court cases as “public trusts,” meaning that the state has full jurisdiction over their activities. The crisis will be too late to start thinking about solutions. At least, in faithfulness to God, you should determine to do this much: Regardless of the cost, never allow the state to dictate the content or method of your teaching in church or school. Speak to the issues. Influence legislation. Throw out the rascals, and vote in the good guys. Make an impact on society, and turn the world upside down (i.e., right side up). Won’t that make the statists mad? Yes. Couldn’t we get taken to court and thrown in jail? Yes. Just like in the Book of Acts, when the believers realized that “we must obey God rather than men.” The conflict will escalate in this decade, and we had better make a clear stand now, while the heat is relatively mild, than set precedents for compromise.

There are other ways to deal with the problem, however. While each of the following solutions has problems, they have merit as well (besides, we haven’t thought of anything better), and so I’m throwing them out for your consideration. I’m not giving ivory-tower cogitations, but the examples of our school and church. (I have to stress that point, in case this falls into the hands of a bureaucrat. I’m not giving legal advice, just personal testimony. What my readers do is their business.)

I’ll begin with the school. Our solution really isn’t so radical—quite a few are doing it—but it’s surprising that it’s so rarely considered. The school is simply a profit-making institution. In many ways, this seems about the smartest thing for a school to do (see Robert L. Thoburn’s How To Establish and Operate a Successful Christian School, Thoburn Press, $125.00), but the best aspect, in terms of this discussion, is the freedom from state control. Not that we don’t have run-ins with bureaucratic racketeers: the head of the city planning commission tried to legally prevent us from getting the property we wanted for the school. In a private conversation, however, he informed us that the realty agency he owned had a listing that would suit us just fine. That was one bribe we didn’t pay, and we got the property we wanted in the first place. So we do have headaches, as any business does. But no one tells us what to say. We can give enormously biased lectures on any issue, and nobody’s holding a gun to our heads or threatening to charge us back taxes. We have no back taxes.

The obvious drawback is that this costs money, which is always the main issue in Christian circles. “Sure, Jesus said we should take up our crosses and follow Him, but He didn’t say anything about giving up our tax benefits!” We all want the faith as cheap as we can get it, but we have to face facts: resistance to an ungodly state is a necessary cost of Christianity. And to get the state off our backs, we dumped the benefits. It just makes it harder for them to get us. They may get us anyway—but they’ll get you first.

My second example is our church. Should it go profit-making top? I once heard someone seriously suggest that, but he never followed through, so I’m not sure how that would really work out. Of course, if I had the clear choice between being untaxed but controlled, and being taxed but free, I would pay the bribe. But those aren’t the only choices—yet. Obviously, the best thing would be an untaxed, uncontrolled church, right? We’ve got it. (Pick up your teeth and read on.) First, and most importantly, we never applied to the state for exemption. As I said, the state has no Biblical right to tax any institution. More to the existential point, the First Amendment denies state control over churches. Taxation is control—”the power to destroy”—and thus the state has no legal right to tax the church. But if you apply to the state for exemption from taxation, you are implicitly acknowledging the state’s right to tax you. Our position is simply that we won’t ask for what the state has no legal power to give.

That isn’t the whole story, naturally. It helps that we have really nothing to tax. The church owns no property—we meet in homes. If we get too big, we’ll either find a bigger home, or have a good old church split (which reminds me of the church that had a revival—they didn’t add any new members, just got rid of a few old ones). A church that is regularly dividing and multiplying in smaller groups is probably more healthy anyway: it increases the members’ responsibility, and discourages clerical tyranny.

Another plus is that we are legally invisible. We have not incorporated. We’re so decentralized that we don’t even exist, legally. Now you’re wondering if we exist at all, right? What could such a church really accomplish? Well, we minister to the community, teach the Bible to scores of neighbourhood kids, testify at city council hearings, meet with local businessmen to discuss Christian economics, and pass out lots of inflammatory leaflets. Of course, we protect ourselves a little—when we published a tract condemning homosexuality and supporting a ballot measure to limit gay activity, it was titled: We Wouldn’t Dream of Telling You How to Vote on Prop. 6… Then we told them how to vote. (If you’d like a copy, send a self-addressed, stamped envelope to the editorial address.)

Getting back to the main issue, we must do anything we can to keep from being seduced or muzzled by government power. Maybe you don’t like the solutions I mentioned. Maybe you think I’m politically naïve. Maybe you have a better idea (if you do, write it in 1100 words and send it in). But if you think there’s no problem with tax exemption, you’re already caught. And if most Christians in this country end up agreeing with you, our future will look like Israel’s history—concession, compromise, apostasy, and destruction.

Biblical Educator, Vol. 2, No, 11 (November 1980)

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