Should scientology be tax exempt?
At the outset — I am not a lawyer. I am certain those more knowledgeable than I can find fault with some imprecise terminology or descriptions I use. But I doubt they would disagree with the general picture I am trying to paint.
Of course, the answer about scientology’s tax exempt status for many people (myself included) is “No, they should NOT be entitled to special exemption from taxation.”
But why? And what is different about scientology than other exempt organizations?
There is a long tradition of protecting religious freedom in the United States. It is a foundation of the country and an extremely valuable and important pillar on which this country was founded and continues to rest today. The First Amendment to the Constitution reads:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.
This has been interpreted in a numerous court decisions, including from the US Supreme Court, to mean that no government agency and no court can make determinations about the nature of religious belief and practice — so long as it does not violate the laws of the land.
So, how do you become a tax exempt religion? That is up to the IRS. There is provision in the Internal Revenue Code to forgo taxing certain categories of organizations, including religious ones. Thus the IRS must make a determination whether an organization fits within that law. De facto they are forced to make a determination of “religious status.” In fact, this is not precisely correct, what they are doing is making a determination about whether an organization fulfills the requirements of Section 501(c)3 of the Internal Revenue Code as applicable to religious organizations. (Of course, scientology proclaims very loudly that this determination by the IRS means they are recognized as a religion).
The underlying principle of tax exemption is that certain organizations benefit the public at large. Educational institutions, relief agencies and churches fit in that category. The general idea is that because they benefit society, they should not be taxed as this simply reduces the amount of money they have available to spend on benefiting the public, and in any case, taxes are supposed to be collected and spent on things that benefit the public, whether it is infrastructure or providing a safe country to live in through the military.
But tax exempt organizations are NOT supposed to be acting in a fashion that is against the law or in violation of”public policy” (
And this is where it becomes very complicated and somewhat murky.
Scientology engages in abuses and human rights violations. Some of these are clearly illegal — child labor law violations for example. Some seem to be violations of public policy (hiring private investigators to harass people “legally,” going through garbage, putting up smear sites, sending out “Squirrel Busters” etc) and others are simply inhumane and nasty, but not illegal — like disconnection.
When confronted with evidence of their abusive activities the default response of scientology is to deny them and begin smear campaigns on the sources. But when push comes to shove and they have to respond in court (as in the Monique Rathbun case in Texas) they claim their activities are “protected from scrutiny by courts by the First Amendment.”
Scientology then trots out their religious comparisons: the Amish and Jehovah’s witnesses have similar disconnection policies. The treatment of Sea Org members with little sleep, sometimes sordid living conditions, the RPF, rice and beans, restrictions on communication with the outside world etc etc are no different than monks and nuns who live under a vow of poverty, eat simple food, pray 5 times a day, maintain a general code of silence and cut themselves off the outside world. In this, scientology is probably correct. They cannot be singled out on this basis.
Eventually they fall back on the argument that the claims against scientology are not more egregious than the scandals in the catholic church with pedophile priests, and “nobody is saying the catholic church should not have tax exempt status” (there are plenty of people who DO in fact say this, that NO churches should enjoy tax exempt status at all).
So, what IS the difference with scientology and why should it lose its tax exempt status?
First, there is evidence that the income of scientology is inappropriately used for the benefit of individuals. This is called inurement. Money going to L. Ron Hubbard in earlier years was a basis for the IRS denying tax exempt status to scientology organizations. Today, it would appear David Miscavige and Tom Cruise are guilty of inurement. Miscavige pays lawyers to ensure he stays within the law, but they are not informed of everything. There are CEO’s of nonprofits, like National Geographic, who earn high six figure salaries and fly around in private jets and this is not considered to violate IRS regulations. But one massive difference in scientology is the gulf between Miscavige and everyone else. Nobody else even comes close to his income and benefits. And Tom Cruise has received significant tax free benefits in the form of free Sea Org slave labor that I suspect was not accounted for as income on his taxes. Probably not enough in and of itself to lose tax exemption.
Secondly, and FAR more importantly, scientology is run like a business. There are price lists. No pay = no service. Scientology convinced the IRS that if you are indigent there is an entire section of the organization designated to help you if you ask for it (the Chaplain’s Dept). This of course is a lie. And of course they forgot to mention HCOPL Free Service, Free Fall and numerous other references that forbid any form of free service in scientology. They combined their pitch about free service to those who cannot pay (and calling them “requested donations”) with the “exchange” card. The IRS were told it is a fundamental religious belief that getting something without exchange is spiritually harmful, so for the good of scientologists and as a part of their “firmly held religious beliefs” they MUST pay. They even went so far as to explain refunds and repayments with this logic. The IRS felt services for money was bad, but were even more disbelieving when they discovered the church professed a “money back guarantee.” That was handled by telling the IRS that it would be spiritually harmful to the church to take people’s money and give them nothing in return. It was a clever ploy as it claims that the payments are not merely to make money, but are part of the “sacrament” of scientology. Sort of like the religions that believe in smoking dope. The IRS (and the courts) cannot second guess this and claim it is a sham without running afoul of the First Amendment.
However, they do not need to. Because scientology itself has proven this is a sham. After IRS oversight ended, they also stopped giving money back, even for undelivered services. Proof that the claim that this was a “firmly held religious belief” was a lie.
There is a third enormous problem.
Scientology does NOT provide a public benefit. The “humanitarian” and “social betterment” programs of the church of scientology are miniscule and are primarily done for the purpose of creating videos to convince people to give more money.
And if one were to exclude the activities of Narconon, Applied Scholastics, WTH Fdn, Criminon and CCHR (because scientology repeatedly states they are NOT church entities when anyone sues them, and proclaim their complete separation) the “church of scientology” brings virtually nothing to the table as far as public benefit goes. According to scientology those entities can continue without the church of scientology, in fact they would be more profitable if they didn’t have to “flow money up the management lines.” So, maintain their status and just eradicate the church’s exempt status. It would NOT decrease whatever public benefit there may be of these activities.
So, what does scientology provide as far as public benefit goes?
Volunteer Ministers and some drug education lectures. Scientology does not run homeless shelters or give food to the hungry. It doesn’t run education programs in third world countries. It does nothing that is traditionally considered the role of religion. Even counseling is only offered for a FEE. In fact, the volunteer minister and drug education activities (as insignificant as they are) are not even FUNDED by the church. They are funded by individual scientologists.
The only thing Scientology does with its money is buy buildings. This is partly to try and comply with IRS regulations that prohibit the accumulation of cash by exempt organizations (remember they are supposed to be for the public benefit, not a private bank). Scientology doesn’t want to “throw money down the toilet” by helping the underprivileged in society — they are considered to be “downstats” and you never “validate a downstat.” Traditionally a church buying or building new facilities is considered to be an “exempt purpose” as by expanding the facilities they will be able to help more people in the community, provide shelters in time of natural disaster. You think the Super Power building will open its doors to the general public as a shelter if a hurricane is heading towards Clearwater? Not a chance, but the pink christian church across the street will. Scientology is gaming the system — buying massive amounts of real estate when there is NO NEED for it to provide services to their community. These buildings are REAL ESTATE and PR investments pure and simple. This is easy to prove — walk into ANY of the “ideal orgs” and they are dead. Bereft of people. Clearly not being used. Nobody can contemplate that a tax exempt religious organization would just buy property it didn’t need. Nor that it would accumulate billions of dollars.
Finally, the fourth compelling reason to withdraw scientology’s tax exempt status is the violation of public policy.
And for this, let’s return to the pedophile priests defense: “you’re not withdrawing the catholics exemption because they have pedophile priests.”
IF there were a few bad actors in scientology compared to the overall picture it would be one thing. While one pedophile priest is one too many, and dozens or hundreds of them is obscene, the scope of the catholic church is enormous and their homeless shelters and food banks and counseling services etc etc span the world. To take away their exempt status would harm a lot of people — as above, that is NOT the case with scientology.
But what if the catholic church had a POLICY that they would investigate and harass anyone who sought to expose the pedophile priests? Spending enormous amounts of TAX FREE (ie publicly subsidized) money on lawyers, private investigators, websites, publications, videos and any other means they could to smear the victims?
What if the catholic church as an institutional policy sought to claim that their abusive actions were “protected under the First Amendment”?
What if the catholic church had an institutional policy to investigate, threaten and harass any media that sought to report on the allegations about pedophile priests?
What if they paid lobbyists to get laws passed that would ensure they were allowed to protect their pedophile priests and that they should be exempt from law enforcement or civil court action because they were ONLY to be dealt with by internal procedures in the church?
What if ALL of those things were true (and some will no doubt claim they are) AND the catholic church did NOTHING to benefit their communities at large?
In that case, I would feel just as strongly that the catholic church is NOT entitled to tax exempt status.
I am no expert on the catholic church. I am an expert on scientology.
All of those things and more ARE true about scientology.
Thus, it should NOT continue to enjoy tax exempt status under the IRS Code.
Anyone can believe anything they want. It is actions that matter. Scientologists have a right to practice their religion as they see fit, no different from christians, jews, moslems, buddhists or rastafarians. But their institution should not be subsidized by the general public when its toxic policies and practices are harming far more people than they are helping.
The only way scientology’s tax exempt status will change is with pressure brought to bear on the IRS. And the most effective pressure is from US Congressional Representatives. Media coverage of the issue helps raise awareness of elected officials and the IRS. But a Congressman or Senator demanding that the IRS answer up on why they are doing nothing about this is what is most effective. Especially if it comes from someone who sits on a key committee. The IRS has to get their budget authorized by Congress too. And while scientology is statistically insignificant numerically, it is NOT statistically insignificant financially. There are are a few billion dollars sitting there.
So, if there is something you want to do, write to your Congressman. Demand he or she take action.