USD Law Professor Miranda Fleischer's Op-Ed on Tax Exemption for Churches Published in Washington Post

Professor Fleischer's Op-Ed on Tax Exemption for Churches Published in Washington Post

Professor Miranda Perry Fleischer

Washington, D.C. (September 17, 2015) – In an opinion piece published by The Washington Post this weekUniversity of San Diego (USD) School of Law Professor Miranda Fleischer argues that the government should not be subsidizing churches since their benefits are enjoyed mainly by a small group and not the public at large.

The accepted academic explanation for why we subsidize nonprofits is that by doing so, we help them to provide public goods otherwise subject to market failure, where the amount produced is less than the amount needed.

Fleischer, who teaches and writes in the areas of individual taxation, federal estate and gift tax, and tax-exempt organizations at USD, gives the example of clean air. "Nobody can be prevented from enjoying it, but this open access leads some individuals to free-ride: Why should I pay for it, when I’ll benefit even if I don’t? If too many individuals free-ride, the market under-supplies the good and no one will pay to produce clean air if they can’t charge others for it," she explains.

For the public goods provided by charities (think of soup kitchens and museums), the government helps overcome free-riding with tax subsidies whose costs are borne by all taxpayers.

Fleischer believes the “public goods” rationale is more objective than a focus on whether organizations are “beneficial and stabilizing influences” on a community and “foster its moral and mental improvement,” which the Supreme Court articulated as justifying property tax exemptions for churches.

"The government shouldn’t be in the business of granting tax exemptions based on which activities it considers 'good' for society," says Fleischer.

She argues that economic rationale suggests the government’s real test for tax exemption should ask whether an activity is subject to free-riding or other market failures. "If it isn’t — and church attendance is not — tax-free status is unnecessary," states Fleischer.

Fleischer contends that it is not to say churches never deserve a subsidy.

"Many of their more unglamorous activities actually benefit society at large, while likely facing market failure. If a church provides ongoing substantial services to others — such as providing basic necessities to the poor through a soup kitchen or shelter — that service merits governmental help."

Read the full op-ed on washingtonpost.com.

About Professor Fleischer

Professor Miranda Perry Fleischer teaches and writes in the areas of individual taxation, federal estate and gift tax, and tax-exempt organizations. Fleischer won the University of San Diego Law School’s 2014-15 Thorsnes Prize for Excellence in Teaching (determined by student vote). Before entering academia, Fleischer practiced as an estate planner at Shaw Pittman LLP and as a litigator at the Institute for Justice, a Washington, D.C.-based public interest group, which piqued her interest in charitable giving.

About the University of San Diego School of Law

Celebrating 60 years of student and alumni success, the University of San Diego (USD) School of Law is recognized for the excellence of its faculty, depth of its curriculum, and strength of its clinical programs. Each year, USD educates approximately 900 Juris Doctor and graduate law students from throughout the United States and around the world. The law school is best known for its offerings in the areas of business and corporate law, constitutional law, intellectual property, international and comparative law, public interest and taxation.

USD School of Law is one of the 84 law schools elected to the Order of the Coif, a national honor society for law school graduates. The law school’s faculty is a strong group of outstanding scholars and teachers with national and international reputations and currently ranks 23rd worldwide in all-time faculty downloads on the Social Sciences Research Network (SSRN). The school is accredited by the American Bar Association and is a member of the Association of American Law Schools. Founded in 1954, the law school is part of the University of San Diego, a private, nonprofit, independent, Roman Catholic university chartered in 1949.

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