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I am so thankful that you have agreed to hold hearings on S 2099, which regards what I believe is one of the most serious threats to religious liberty in American history. The change in the Social Security Act, for the first time in American history, authorizes the federal government to directly tax religious ministries to include the church of Jesus Christ.

I have written to four attorneys specializing in First Amendment law. They all agree that the best way to avoid application of this unconstitutional tax upon religious ministries is for Congress to repeal it before it takes effect. Since Congress needs time to consider it, it is necessary to pass the Jepsen Arzendment 32099) or a slightly improved version as quickly as possible after it reconvenes. During the delay before implementation Congress needs to thoroughly examine the religious issue in taxation and repeal the tax on religious ministries. If this is not done I fear many of us will be in expensive litigation.

There is one deficiency that I see in the current language of the Jepsen Amendment. The final section says, "For purposes of this section a charitable or educational organization which is affiliated with a religious shall be considered to be a religious organization." I believe such language is included to insure that parochial schools are covered by the implementation delay. While such a purpose is clearly right, it ignores the fact that many Christian schools (approximately 30%) having the same religious ministry as schools organized under a local church or denomination are independently organized. Such schools are called Category III Schools. The danger of faulty legislative language is illustrated in the court cases involving application of the Federal Unemployment Tax Act (FUTA) to religious schools. When Secretary of Labor Ray Marshall unilaterally decided to include religious schools under the FUTA system, court cases sprang up all over America. In the St. Martin's case, the Supreme Court determined that the language of FUTA exempted schools operated by a church or convention or association of churches. The court went on to distinguish between church schools integrated into a church's structure and those separately incorporated. In footnote #12 it states, "The importance of this distinction...is heightened by the great diversity in church structure and organization among religious groups in this country. ... This diversity makes it impossible, as Congress perceived, to lay down a single rule to govern all church related organizations. Our holding today concerns only schools that have no legal identity separate from a church. To establish exemption from FUTA, a separately incorporated church school (or other organization) must satisfy the requirements of Section 3309(b)(1)(B)... we leave the issue of coverage under 3309(b)(1)(B) for the future." A serious consequence results from distinguishing between religious schools organized as part of a church and those that are not, even though they have the si Following the St. Martin decision, the government continued to attempt to apply FUTA to separately incorporated or independent (Category III) religious schools. This meant that litigation on behalf of Category III Schools had to

In the Grace Brethren case, which went to the Supreme Court, the Supreme Court remanded the case on the grounds that the case should have proceeded to the Supreme Court through the state court system rather than the federal court system. Since the Salem Academy case had already been proceeding in Oregon through the state courts, the Grace Brethren case has been dropped and efforts have been concentrated in the Salem Academy case. For Rocky Bayou Christian School, an independent Christian school in Florida, state officials have gotten to the point where they wish to serve a tax lien on our property. This action is presently on a hold pending resolution of the Salem Academy case. All of this litigation and hassle would be unnecessary if the language of the law simply recognized that religious ministries, because

of 1st Amendment protection, are immune from federal taxation. Since taxation is a means of control and destruction, I would ask that we not make the same error in any language concerning the Social Security Act. : Focusing on this point alone, I would recommend that the last paragraph of the Jepsen Amendment be changed to read, "For the purposes of this section, educational ministries organized for religious purposes are religious organizations." Since this is quite a technical point, very few are sensitive to this issue. I know that Attorner Willian Ball does understand it and if further clarification of the problems introduced into law by language which is not sensitive to this issue is necessary, I recommend discussing it further with him.

I attach a 13 September letter from Attorney William Ball to Dr. Paul Kienel giving some of his views. I also attach a brief analysis made by the

ristian Education and Research Foundation. Finally, I attach my own analysis of the biblical and constitutional reasons that religious ministries should not be asked to pay such a tax. By way of a summary, let me ask a few key questions.

In Matthew 28:18 Jesus says to His disciples, "All authority has been given unto me both in heaven and on earth. Our founding fathers understood that man's law must recognize the higher law of God and conform to it. Has Congress lost this concept?

If only a greater can tax a lesser, how can we allow civil government to tax the church of our Savior?

In the first century, Christians went to the lions before they would simply make the false confession that Caesar was lord over Christ. If Jesus is Lord, how dare today's Christians confess the lordship of the federal government?

If the power to tax is the power to control and destroy, how dare American freedom lovers sit back and do nothing when such taxes are applied to Christ's ministries?

If the U.S. Constitution comanands that Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof, how dare Congress pass a law to directly tax religious establishments, and how dare Christians submit to such a violation of biblical and constitutional principles?

I note that even the great Persian emperor Cyrus carefully excluded religious teachers from taxation (Ezra 7:24). In the American heritage, until now, governmental hunger for added runds has not run roughshod over religious liberty. I urge the Congress to reconsider, and I thank you, Sir, for allowing us an opportunity to discuss the religious liberty aspect of the Social Security Act.

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Starting January 1, 1984, all churches and schools which are exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code will be required to pay FICA (Federal Insurance Contributions Act) taxes for each employee who is paid $100. or more in a calendar year.

This change was made by the Congress virtually without opposition. Some churches took a position supporting the amendment on the ground of its benefit to their employees. It was also argued that the new tax is necessary to keep the Social Security program in existence. Further, churches and schools in many states already pay sales and excise taxes.

The principle involved is plainly a tax on religion. Churches and religious schools are not afforded an option to pay, or not to pay, for an insurance program for their employees. The relatively small size of the tax is irrelevant (though to some the burden may be substantial). If religion may be taxed a little, why not greatly? The tax imposes obligations upon religious bodies in respect to the Lise and management of their own resources and with respect to the personnel of their ministries.

What should be done with respect to this change? it is our opinion that a test litigation would fail. Without spalling out detailed reasons, it is clear to us that the Supreme Court would not strike down the amended law. The --!ly remedy we see is through the Congress, Corrective legislation should be prepared and introduced at a very eariy date.

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IN DEPTH

The New Social Security Law
As regular readers of FOCUS

NCAC does suggest, however, ON FREEDOM know. churches, that there is an alternative if the Christian schools and other non committees fail to act. A repealer profit organizations must begin pay amendment could be attached to a ing Social Security taxes on their finance bill on the floor of the employees beginning January 1. Senate. To take advantage of this 1984. In the past, enrollment under strategy. those seeking the repeal the program has been optional, not would need: (1) an appropriate mandatory. Many pastors have "vehicle;" i.e., a finance bill that voiced their opposition to the new was "veto-proof;"(2) a Senator will. law: some, in fact, have indicated ing to introduce the amendment; they will not pay Social Security and. (3) promises of votes from 51 taxes on their employees. There is

Senators considerable reason for their oppo

It is possible that the new law sition. Social Security (F.I.C.A.)

will be challenged in the courts. The payments are taxes. The employer.

Christian Law Association, based in in this case churches and Christian

Cleveland, Ohio, is currently examschools, are responsible for one-half of the tax. The other half is deducted

ining that prospect. The way it from the employees' salary.

would happen is this: On January 1,

a church governing board could The National Christian Action Coalition (NCAC). a Washington

write a letter to Treasury Secretary

Reagan politely informing him that based lobbying organization, has examined possible legislative

they have no intention of paying

F.I.C.A. taxes. Soon thereafter, remedies. In their August newsletter. they report that the only

the government would bring legal

action against the church. What reasonable solution would be to

happens then is anybody's guess. repeal that section of the new law which applies to religious, non

Judging by how the Supreme Court

ruled on the Bob Jones University profit organizations. The normal

case, the church could lose. route for such a repeal would be through the Senate Finance Coni

However, there have been recent

cases involving Christian organizamittee: (Bob Dole, R-KS. Chairman)

lions and the National Labor Relaand the blouse: Wars and Means

lions Board which give some cause Committee (Dan Rosterkowski.

for oopilinnismi. D-II., Chairm.,11). "Inless there is il massive telephone and mail flori

In conclusion, it shouli be targeted at those Committees from note:el that many churches and 'mainstream and independent (ihristian schools already pay Social churches, and Christian schools." Security taxes for their employees. cautions NCAC. “the Congress will Thal is not really the issue. The not even move off first base. Look at issue is: Con such a tax be mandail realistically: Nobody wants to Ivrily levied against the church? reopen the Social Security can sometime in the next year we of worms."

should know.

Focus on Freedom is published twice monthly by the Christian Education and Research Foundation, Capitol I, Suite 306, 5515 Cherokee Avenue, Alexandria, Virginia, 22312. Williarn Billings, Editor. Subscription rate: 50 copies of each issue --$7.50/month; 100 copies-$10.00/month; rates for additional copies on request.

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