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Supreme Court likely to embrace expanded tax exemption for religious charities

<img src="https://api.follow.it/track-rss-story-loaded/v1/BiXBAMZx0XhReqN0dgpcyHn9ye8UNv30" border=0 width="1" height="1" alt="Supreme Court likely to embrace expanded tax exemption for religious charities" title="Supreme Court likely to embrace expanded tax exemption for religious charities"> <img width="150" height="150" src="https://www.scotusblog.com/wp-content/uploads/2025/03/supremecourt-5-150x150.jpg" class="attachment-thumbnail size-thumbnail wp-post-image" alt="Supreme Court likely to embrace expanded tax exemption for religious charities" title="Supreme Court likely to embrace expanded tax exemption for religious charities" style="float:right;" decoding="async" srcset="https://www.scotusblog.com/wp-content/uploads/2025/03/supremecourt-5-150x150.jpg 150w, https://www.scotusblog.com/wp-content/uploads/2025/03/supremecourt-5-570x570.jpg 570w, https://www.scotusblog.com/wp-content/uploads/2025/03/supremecourt-5-500x500.jpg 500w, https://www.scotusblog.com/wp-content/uploads/2025/03/supremecourt-5-1000x1000.jpg 1000w" sizes="(max-width: 150px) 100vw, 150px" /><p><a class="a2a_button_facebook" href="https://www.addtoany.com/add_to/facebook?linkurl=https%3A%2F%2Fwww.scotusblog.com%2F2025%2F03%2Fsupreme-court-likely-to-embrace-expanded-tax-exemption-for-religious-charities%2F&linkname=Supreme%20Court%20likely%20to%20embrace%20expanded%20tax%20exemption%20for%20religious%20charities" title="Facebook" rel="nofollow noopener" target="_blank"></a><a class="a2a_button_linkedin" href="https://www.addtoany.com/add_to/linkedin?linkurl=https%3A%2F%2Fwww.scotusblog.com%2F2025%2F03%2Fsupreme-court-likely-to-embrace-expanded-tax-exemption-for-religious-charities%2F&linkname=Supreme%20Court%20likely%20to%20embrace%20expanded%20tax%20exemption%20for%20religious%20charities" title="LinkedIn" rel="nofollow noopener" target="_blank"></a><a class="a2a_button_twitter" href="https://www.addtoany.com/add_to/twitter?linkurl=https%3A%2F%2Fwww.scotusblog.com%2F2025%2F03%2Fsupreme-court-likely-to-embrace-expanded-tax-exemption-for-religious-charities%2F&linkname=Supreme%20Court%20likely%20to%20embrace%20expanded%20tax%20exemption%20for%20religious%20charities" title="Twitter" rel="nofollow noopener" target="_blank"></a><a class="a2a_button_email" href="https://www.addtoany.com/add_to/email?linkurl=https%3A%2F%2Fwww.scotusblog.com%2F2025%2F03%2Fsupreme-court-likely-to-embrace-expanded-tax-exemption-for-religious-charities%2F&linkname=Supreme%20Court%20likely%20to%20embrace%20expanded%20tax%20exemption%20for%20religious%20charities" title="Email" rel="nofollow noopener" target="_blank"></a><a class="a2a_button_printfriendly" href="https://www.addtoany.com/add_to/printfriendly?linkurl=https%3A%2F%2Fwww.scotusblog.com%2F2025%2F03%2Fsupreme-court-likely-to-embrace-expanded-tax-exemption-for-religious-charities%2F&linkname=Supreme%20Court%20likely%20to%20embrace%20expanded%20tax%20exemption%20for%20religious%20charities" title="PrintFriendly" rel="nofollow noopener" target="_blank"></a><a class="a2a_dd addtoany_no_icon addtoany_share_save addtoany_share" href="https://www.addtoany.com/share#url=https%3A%2F%2Fwww.scotusblog.com%2F2025%2F03%2Fsupreme-court-likely-to-embrace-expanded-tax-exemption-for-religious-charities%2F&title=Supreme%20Court%20likely%20to%20embrace%20expanded%20tax%20exemption%20for%20religious%20charities" data-a2a-url="https://www.scotusblog.com/2025/03/supreme-court-likely-to-embrace-expanded-tax-exemption-for-religious-charities/" data-a2a-title="Supreme Court likely to embrace expanded tax exemption for religious charities">Share</a></p><p>The Supreme Court on Monday appeared sympathetic to the argument by a Catholic Charities chapter that Wisconsin violated the Constitution when it refused to give the group the same exemption from the state’s unemployment tax that it provides to churches, religious schools, and some religious groups. Justices from both sides of the ideological spectrum seemed to agree that the state’s denial of the exemption amounted to discrimination against Catholic Charities, with Justice Elena Kagan suggesting that it was “pretty fundamental that we don’t treat some religions better than others. And we certainly don’t do it based on the content of the religious doctrine that those religions preach.”</p> <p>Catholic Charities is a social ministry arm of each Roman Catholic diocese in Wisconsin. This case was brought by the chapter for the diocese of Superior, which is in the northwestern part of the state, as well as four separate groups operating under the Catholic Charities umbrella that provide social services to people with disabilities.<span id="more-319403"></span></p> <p>The dispute began in 2016, when Catholic Charities sought an exemption from having to pay a Wisconsin unemployment tax for its employees. It contended that its employees are covered by a provision of the statute that carves out from the definition of “employment” anyone who works for (as relevant here) “an organization operated primarily for religious purposes” because the group carries out its charitable works to put Catholic principles into operation.</p> <p>A state labor commission ruled that the exemption did not apply because even if Catholic Charities has religious motivations, its activities are secular. </p> <p>The Wisconsin Supreme Court agreed that the exemption was not available. Although Catholic Charities may have religious motivations, it acknowledged, the group was not operated primarily for religious purposes because it does not “attempt to imbue” people who participate in its programs “with the Catholic faith nor supply any religious materials to program participants or employees.” Moreover, the state supreme court noted, Catholic Charities both employs people of all faiths and provides its services to them.</p> <p>At the Supreme Court on Monday, lawyer Eric Rassbach, representing Catholic Charities, told the justices that the Wisconsin Supreme Court had improperly interpreted the unemployment tax exemption “to favor what it called ‘typical’ religious activity.” Moreover, he added, it “held that helping the poor can’t be religious, because secular people help the poor too. To resolve this case,” he stressed, “this Court need do nothing more than say that the Constitution doesn’t allow courts to do that.”</p> <p>Rassbach faced some skeptical questions about the limits of his proposed rule. Kagan asked whether any group that contended it was a religious group with religious activities and a religious purpose would qualify for the exemption.</p> <p>Rassbach countered that the group’s beliefs must be sincere, and they must be religious, rather than philosophical.</p> <p>Justice Ketanji Brown Jackson, perhaps the state’s strongest supporter, suggested that the Wisconsin Supreme Court was asking the wrong questions about what it means to be an organization “operated primarily for religious purposes.” The Wisconsin law mirrors a federal unemployment tax law, she noted. And when Congress enacted that law, she explained, it distinguished between institutions like “a college devoted to preparing students for the ministry” on the one hand, which would be entitled to the exemption, and – on the other hand – a church-affiliated orphanage or nursing home, which would not be entitled to the exemption. That history, she contended, indicates that for the federal law, Congress intended to draw a line between charitable organizations run by the church – like Catholic Charities – and “organizations run by the church that are like training programs for priests.”</p> <p>And Justice Amy Coney Barrett questioned Rassbach’s argument that the exemption violates the church autonomy doctrine – the principle that the government should not interfere in internal church affairs, and in particular in how a religious institution governs itself. “It seems to me,” Barrett said, “that there’s a difference between telling a church what to do or interfering in its internal affairs” and giving the church an incentive “to do certain things.”</p> <p>Rassbach pushed back, countering that it “really matters what the incentives are.”</p> <p>Representing Wisconsin, Assistant Attorney General Colin Roth told the justices that the state’s unemployment tax exemption was intended to address “a particular problem” – specifically, to avoid having the state decide whether employees complied with religious doctrine when churches and religious institutions fire their employees, who then file for unemployment benefits. “So Wisconsin gives those kinds of employers a wide berth by prophylactically exempting them,” Roth explained. But to limit the number of employers who do not pay into the unemployment system, Roth added, only the “employers most likely to draw the state into doctrinal disputes” qualify for the exemption.</p> <p>By contrast, Roth asserted, Catholic Charities asks the court to adopt a “motive-only test” without any limits. That test, he warned, “would leave potentially over one million employees nationwide without unemployment coverage, like nurses and janitors at religiously affiliated hospitals, even though the state can virtually always determine their benefit eligibility without confronting religious doctrine.”</p> <p>If a few justices had pressed Rassbach, almost all of them had questions for Roth. Thomas queried whether Catholic Charities would qualify for the exemption if it were incorporated as part of the church, rather than as a separate nonprofit.</p> <p>When Roth answered that it would, Thomas shot back, “What’s the difference? If the function is exactly the same, but it’s a separate entity, what’s the difference? Religiously?”</p> <p>Perhaps to highlight what he saw as the artificial line that the law draws, Chief Justice John Roberts asked Roth to explain “the simplest thing that Catholic Charities would have to do to qualify for the religious exemption in Wisconsin.”</p> <p>Roth responded that proselytization – soliciting others to join the Catholic faith – as a condition of receiving a service from Catholic Charities would qualify.</p> <p>Justice Neil Gorsuch then jumped in, asking Roth where to draw the line. Does Catholic Charities have to require the people receiving their services to “repent,” he asked, or it won’t receive the exemption? Or, Gorsuch continued, “is mandatory church attendance versus optional church attendance, that’s the line?”</p> <p>Roberts later interjected, “You want a test that is the easiest one for you to apply.”</p> <p>Gorsuch and Barrett both suggested that a rule that hinges on whether the religious nonprofit is proselytizing would result, as Gorsuch observed, in the government becoming involved in religion “a whole lot more than” a rule that requires the government not to discriminate between religions.</p> <p>Kagan acknowledged that there “are lots of hard questions in this area.” But, she continued, the Wisconsin Supreme Court’s ruling focuses on two issues – the idea that Catholic Charities serves people of all faiths, which the state is no longer defending, and the idea that it does not proselytize. “Some religions proselytize,” Kagan said. “Other religions don’t. Why are we treating some religions better than others based on that element of religious doctrine?” The state’s rule, she concluded, “basically puts the state on the side of some religions with some doctrine versus other religions with a different doctrine.”</p> <p>Gorsuch echoed Kagan’s concerns a few minutes later. “Isn’t it a fundamental premise of our First Amendment,” he asked Roth, “that the state shouldn’t be picking and choosing between religions, between certain evangelical sects, and Judaism and Catholicism on the other, for example?”</p> <p>In his rebuttal, Rassbach stressed that the United States is a “religiously pluralist society. And that calls,” he said, “for a generous approach to religious exemptions, not a stingy one.” A majority of the justices seemed inclined to agree.</p> <p><em>This article was <a href="https://amylhowe.com/2025/03/31/supreme-court-likely-to-embrace-expanded-tax-exemption-for-religious-charities/">originally published at Howe on the Court</a>. </em></p> <p>The post <a href="https://www.scotusblog.com/2025/03/supreme-court-likely-to-embrace-expanded-tax-exemption-for-religious-charities/">Supreme Court likely to embrace expanded tax exemption for religious charities</a> appeared first on <a href="https://www.scotusblog.com">SCOTUSblog</a>.</p>