The IRS is investigating a liberal California church to determine if it acted too politically when its rector (preacher?) gave an antiwar sermon before the 2004 election.  A federal law bars charities and churches from engaging in political activities while enjoying tax exempt status.  If found guilty, one possible action would be the revocation of the church’s tax exempt status.

This is a classic case of the federal government cajoling an entity into voluntarily sacrificing a constitutional right.  Every person and organization is entitled to their first amendment rights, but the government has encouraged churches and other non profits to give up their right to speak freely about political issues in exchange for some tax savings.  In other words the government has paid them to abridge their right to freedom of speech.

Another very common example of such a buy off can be seen in federal funding, such as highway funding.  States have the right to set their own laws and regulations, including the legal age to purchase alcohol.  But the federal government threatens to cut off funding for roads to any state that does not implement a requirement that people must be 21 years old to purchase alcohol.  Effectively, the government has usurped state’s rights by using a carrot and stick technique.

Back to the church story, this is a great example of why we need the FairTax.  One of the many positive aspects of the FairTax is that it dramatically curtails the ability of the federal government to engage in social engineering.  If a church wants to exercise its first amendment rights and comment on politics, then that is just fine - there will be no recourse.

The mortgage interest deduction is a prime example of governmental social engineering.  It was created to encourage home ownership, and it has worked to that effect.  But, it is a plan that actually encourages people to take on as much debt as they possibly can in order to buy, in many cases, more house than they really need.  That is a bad, bad policy.  Our national savings rate is negative and the mortgage interest deduction is a contributing factor.  Like most social engineering programs that the income tax makes possible, the intentions are altruistic, but they succumb to the law of unintended consequences.

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This entry was posted by Brian on Saturday, September 23rd, 2006 at 4:47 am and is filed under FairTax, Government, Religion, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Please note the copyright policy.