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Nowhere did we find prior research summarizing and detailing religious finances and tax policy, so we decided to investigate it ourselves. This article is the result. It took some digging, but we think we now have a moderately clear understanding of the tax laws regarding religions in the United States. What we found suggests that religious institutions, if they were required to pay taxes the same as for-profit corporations do, would not have nearly as much money or influence as they enjoy in America today. In this article we estimate how much local, state, and federal governments subsidize religions.

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. . . [R]eligions spend a relatively small portion of their revenue on “physical charity”, and while they spend a larger portion of their revenue addressing “spiritual concerns”, most of that qualifies as labor, not charity. What little would qualify as “spiritual charity” would not be replaced by government if discontinued. In short, religions are, by and large, not engaged in charitable work.

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. . . [T]he subsidies to religions in the United States today may not be encouraging the growth of religions, but they may be keeping alive on the equivalent of subsidized life-support many religions that should be dead.

If these subsidies were removed—though we have no basis for believing that they will be anytime soon—we wonder what the damage to religion would be. There is evidence that donations to religions are tied to taxes; as the tax benefit of donating goes up, so do donations and vice versa. In other words, it seems likely that the removal of these subsidies would result in a substantial decrease in the supply of religion in the United States. To what extent it would affect demand for religion is uncertain.

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. . . [I]t seems likely that subsidies are propping up religion in the United States, though to what extent is not clear. Certainly many religions that are near failing would have done so already if not for the subsidies they receive from the government. Another practical result of these subsidies is that religions are more affluent and more influential than they would otherwise be, because they have the resources to fund efforts to change legislation, create widely consumed media, and influence public policy.

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. . . These subsidies should be phased out. But since that is unlikely to happen, we’d accept the following alternative: . . . direct cash transfers to us from the government for trying to convert people to our worldviews while claiming to provide social services[.]

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