Other Approaches to Assessing and Paying Tithes and Taxes

On the occasion of the announcement of the Church Online Donations website, which “will allow members in the United States an additional method to submit their contributions to the Church,” I thought I would share how such things can be handled (but aren’t necessarily by The Church of Jesus Christ of Latter-day Saints, just to be clear) on the other side of the Atlantic. Depending on cultural and historical factors that inform how churches in Europe today finance their programs and activities–such as the strength of the relationship between church and state and who ended up with the temporal estates of ecclesiastical states back in ought-ninety-eight–the differences to practices common in the United States can be stark.

Italy, for example, has used the “otto per mille” system since the 1980s in which taxpayers can designate a recipient–either state welfare programs or one of several  recognized religions–for a portion of their income tax (0.8%). It isn’t a tax per se, simply a system that allows the tax payer a little control over what the state does with a portion of the taxes it collects and disburses anyway. Also, one’s membership status is irrelevant. If no recipient is designated, the funds are distributed among the possible recipients according to proportion of explicit declarations. Spain actually led the way with such a system in the 1970s and Hungary followed suit in the 1990s. The LDS church is recognized in Italy and could but does not participate in the scheme. I don’t know about the church’s status in Spain or Hungary, but I’m sure that it wouldn’t participate there either even if it could–“free-will offerings or bust” appears to be the church’s byword globally despite the local options that it might have.

Anyway, back to Europe. Germany has a real, honest-to-gosh church tax that “religious communities” and “communities of conviction” recognized as legal entities under public law may assess their members (and some non-members under certain circumstances). Depending on the federal state of residence, the tax amounts to 8% to 9% of one’s income tax; it can also be assessed on capital gains and property. In the case of Germany’s church tax, membership status does matter since a church can generally only tax its own members (exception: the non-member spouse of a part member family can be assessed if the member spouse has no or less income than the non-member spouse) and the tax is generally withheld along with other social security and income taxes by the competent tax authority. As you might guess, the long arm of German church tax is a leading cause of self-excommunication. But removing your name from membership rolls in an attempt to make an end run around the tax while trying to maintain participation in the community can be tricky–in 2012 the Federal Administrative Court held it is not possible for one to excommunication oneself for tax purposes and remain a member of (in this case) the Catholic church. And the Catholic church has decided to withhold sacraments and offices from tax dodgers. The LDS church has the necessary legal status to assess the German church tax but, like in Italy, it refrains from doing so. 

Austria has a “church contribution” that is similar to Germany’s: membership matters, though due to the historical background–Joseph II seizes property, plant and equipment of various monasteries, sells it and establishes a fund to support the only churches that mattered back then; Hitler then abolishes the fund and introduces the tax to entice members to leave in droves; they don’t, the war ends and somebody’s got to pay the upkeep on all this stuff; the “contribution” is anchored in post-war law–only Catholics and Protestant have to pay. Also, it’s a real tax–1.1% of your income if you’re Catholic and 1.5% if you’re Protestant. Each denomination has its own exemptions and formulas for determining the final amount. As an aside, it is interesting to note that the Catholic church in Austria assumes that the self employed underreport their taxes and hits them up with a minimum assessment that is four times higher than wage slaves. (Two things you need to know–1) all taxes of salaried workers are automatically withheld by the employer and it is not necessary to file individual tax returns if all income is from such employment; this makes it easy for the all-seeing eye to estimate the basis for the “contribution.” 2) it is up to the individual to correct the assessment made by the contribution unit.) However, the churches in Austria can only dream of the efficient state tax collecting machine their counterparts in Germany have–here they have to do their own collection and enforcement, which puts the churches in the difficult position of trying not to alienate their membership while engaging in dunning. As you might guess, this balance is hard to maintain, and the cause of many self-excommunications in Austria is the same as in Germany.

So there you go. Unsurprisingly, (I am an American Mormon, after all) I prefer the basic approach of the The Church of Jesus Christ of Latter-day Saints where individual members are allowed to assess themselves. There’s something about a free-will offering that consecrates it in a way that an assessed tax or membership doesn’t. So I hope that in addition to reducing the administrative burden on the parties involved, this new payment system will reinforce the integrity the honor system the Church champions throughout the world by reducing the temptation to “trust, but verify” the declarations of some individuals.

Comments

  1. SuHwak says:

    What I don’t understand is this (I’m Dutch); why doesn’t every unit have its own checking account?

    I’m a Ward Clerk in The Netherlands, and its been a long while now that each our units each have their own checking account where the members can easily deposit their donations and (in the description field) what amount of the total goes to tithing, fast offering or other funds.

    This is a rough estimate, but I think about 90% of the members that donate (afaik ofcourse) donate this way, and 95%+ of the total amount donated comes in this way.

    It makes my job a lot easier! And its 100% safe, no possibility of foul play, and have I mentioned its a lot easier? Also, _I_ feel a lot safer not having to carry a lot of cash around before I can deposit it at the bank since we can only do this on the next (business) day.

  2. SuHwak says:

    Sorry, I meant to say “every unit in the USA”

  3. Peter LLC says:

    Not sure, to be honest, but in my experience the US banking system is pretty unwieldy compared to Europe when it comes to transfers.

  4. Rachel says:

    This is very interesting, and somewhat affirming (as an American Mormon) to hear that our church could be collecting additional/alternative offerings in other ways and chooses not to. I agree about the importance of free-will offerings.

    On a related note, I have noticed members in my family/friends circle question and sometimes redefine what tithing as a percentage means to them. Those involved are very orthodox in every other respect, but they interpret the scriptures/church history differently and believe a blanket 10% is not what the Lord intended. Any thoughts on doing a round-up on different interpretations (or have you done so already?) This is new to me, but I wonder if it is part of a larger movement.

  5. Surprised to hear the Church doesn’t participate in the Italian approach — it does in the UK approach which sounds virtually exactly the same.

  6. My grasp of the subject matter is too superficial to venture a guess why that it the case, but according to this it looks like the church in Italy has opted to let its members take a tax deduction instead.

  7. Thanks, Peter. As an American Mormon tax guy, I find the Church Tax route absolutely fascinating. In Germany, at least, it appears to be a response essentially to disestablishment, which would make it hard to set up in most Western countries if it weren’t already there.

    Interestingly enough, the idea of the church tax isn’t as foreign to Americans as we think it is—various states used to impose church taxes that were similar to Germany’s. Our lack of recognition is excusable, though, given that the last one, in Massachussetts, ended in 1833.