When the little town of Mount Clemens was on the brink of going broke, Mayor Barb Dempsey appealed to its churches and other tax-exempt entities for mercy – and money.

After all, the churches in the Michigan town got all the civic benefits – streets, police and fire protection, etc. – without paying a dime. That placed a “tremendous burden” on property owners who do pay taxes, the mayor’s appeal said.

Indeed. Religious organizations in America are largely exempt from income, sales, property and other taxes – perks worth at least $71 billion a year in the U.S., according to a recent study that was quite conservative in its methodology.

That translates into a break of some $7 billion a year for religious institutions in California, and some $700 million a year for those in Orange County. The totals are likely higher, as real estate (and nearly everything else) in California is more expensive than almost anywhere in the nation.

“Most religious organizations are not turning around and giving that money to the poor,” said Ryan T. Cragun, associate professor of sociology at the University of Tampa and principal author of “How Secular Humanists (and Everyone Else) Subsidize Religion in the United States.”

“I consider myself an expert on religion, and three years ago, I didn’t know any of this,” Cragun said. “Most people have no idea how the religious exemptions work, or what they’re worth. No one had really tried to calculate it. Just putting it on the radar is worth doing, even if it’s not going to change policies in the short run. In the long run, I think it will.”

Why? Because fewer and fewer people align themselves with organized religions, and they may be less and less willing to give believers tax breaks.

In Orange County, fewer than half of residents – 1.34 million – said they belonged to a religious congregation, according to the latest data from the Association of Statisticians of American Religious Bodies. That left the majority – 1.63 million – unaffiliated.

And although it may be a cold day in, say, Miami before many church exemptions are eliminated in the U.S., Cragun thinks adjusting property tax exemptions could get some traction.

“It makes sense, right?” he said. “When you point out that they get all the benefits of public services without paying, that’s a little disturbing.”

Defenders of the exemptions say they keep the government’s nose out of religious business, thus upholding the separation of church and state, and that churches provide crucial social services that the government otherwise would have to provide. Two hundred years of exemptions have not turned America into a theocracy, they argue.

For the record, we asked several prominent and not-so-prominent local religious organizations to weigh in on the topic, more than once. None got back.

‘PARSONAGE ALLOWANCE’

Another perk that has sparked considerable controversy is the “parsonage allowance” – made famous by a legal battle between the Internal Revenue Service and Rick Warren of Saddleback Church more than a decade ago.

This bit of the tax code allows “ministers of the gospel” to collect a tax-free housing allowance and deduct mortgage interest from their taxable income.

Warren was claiming about $80,000 a year; the IRS said that was too much. Their fight went to court, and then Congress stepped in, sliced up the baby and gave each side some of what it wanted. Warren got to keep his deductions for those past years, and the IRS got firmer rules on what “ministers of the gospel” could claim as parsonage allowance in the future.

It allowed us a glimpse into the mega-church’s finances that we never would have gotten, as churches don’t have to file a lick of paperwork or account to the government for their finances. Again, even the most studied found it stunning.

“I confess that I had never heard of the parsonage exemption until I received a call from the 9th Circuit staff attorney asking me to participate in the Warren case,” wrote Erwin Chemerinsky, constitutional law expert and now dean of UC Irvine’s Law School, in 2003.

“Once I looked at it, I had no doubt that this law – which provides over $500 million in support to religion each year – violates the Establishment Clause. Congress’s action succeeded in making the Warren case moot. But it did not alter the basic provision: Ministers of the gospel receive a tax benefit available to no one else,” Chemerinsky wrote.

Today, the break applies to about 45,000 clergy members and costs the federal government about $760 million a year, according to the latest legal battles over its constitutionality.

“The issue is simple: Can the government provide a benefit to clergy that no one else in society receives? It is hard to imagine even the most conservative justices being able to justify such a blatant favoritism of religion,” Chemerinsky wrote.

WHERE DID IT ALL COME FROM?

For some evenhanded history, we turn to Kamy Akhavan, president and managing editor of ProCon.org, which presents vigorous arguments from both sides of the debate.

The tax exemption for churches can be traced all the way back to the Roman Empire, Akhavan said, when Emperor Constantine (306-337) granted the Christian church a complete exemption from all forms of taxation after his supposed conversion to Christianity circa 312.

Church property was also tax-exempt in medieval England, on the theory that the church did some work the state would have had to do and should get something for its troubles.

That idea came across the ocean with the settlers. By the time of the American Revolution, nine of the 13 original colonies offered some kind of tax relief to churches. Congress formally gave the income tax exemption to churches and other nonprofits in 1894; the legislation that included it was declared unconstitutional in 1896; and it was reinstated by the Revenue Act of 1913, which created the modern American income tax system.

The rationale for religious tax breaks: “Evidently the exemption is made in recognition of the benefit which the public derives” from church activities, the U.S. Supreme Court said in 1924.

Critics, however, say that giving churches special tax breaks favors believers over nonbelievers and violates the separation of church and state. In tough economic times, the government can’t afford a subsidy to religions worth billions of dollars each year, they argue.

“Both sides have really compelling arguments, and both start in the Constitution,” Akhavan said. “There has been talk over the years about adjusting the exemptions – especially during the recession – but it remains politically unpopular to do anything that’s seen as being against the church.”

Indeed, one must reach pretty far back to find an elected official who has proposed any such thing.

In the 19th century, Presidents James Madison, James Garfield and Ulysses S. Grant opposed the property tax exemption for churches. “Grant submitted a 900-foot-long petition containing 35,000 signatures to Congress in 1875, demanding ‘that churches and other ecclesiastical property shall be no longer exempt from taxation,’” Akhavan wrote at ProCon.org.

Grant said that in 1850, the church was getting a tax break of about $83 million. By 1860, the amount had doubled, and in 1875, it was about $1 billion. “By 1900, without check, it is safe to say this property will reach a sum exceeding $3 billion,” Grant wrote. “So vast a sum, receiving all the protection and benefits of government without bearing its portion of the burdens and expenses of the same, will not be looked upon acquiescently by those who have to pay the taxes.”

LET US COUNT THE WAYS

Some of the tax breaks are so hard to quantify that Cragun and his fellow researchers at the University of Tampa didn’t try. The value of local sales and income tax breaks for 345,000 congregations in America’s 30,000-plus cities and towns? Suffice to say, it’s a lot – likely, many billions – but wasn’t included in Cragun’s count.

Then there’s the income tax exemption. People give more money to religion than any other charitable enterprise – about $105.53 billion in 2013, according to Indiana University’s annual Giving USA analysis – and that is tax-free income for churches, synagogues, mosques, temples, etc. And that money is tax-deductible for the people who gave it as well.

Orange County residents claimed charitable deductions of $2.5 billion in 2012, according to data from the Internal Revenue Service. Since about one-third of giving goes to religious institutions, Giving USA has found, figure that’s about $833 million donated directly to churches et al here in Orange County.

Then there’s the property tax exemption that galled President Grant. Mount Clemens – that small town near Detroit that asked churches et al to pony up for city services – was in far more dire straits than most: Nearly half of its property was tax-exempt. That’s radically different from Orange County, where just 2.3 percent of parcels are exempt, according to figures from the assessor’s office.

In Orange County, though, that tiny slice of exempt properties is worth a princely $27.3 billion. That’s 5.7 percent of the total value of all property countywide ($477.9 billion) and represents some $300 million a year in property taxes that are not being paid. (Important note: These figures cover all exempt properties, including government-owned land. We’re working on getting more specific figures for religious and church exemptions from the assessor.)

To put it all in perspective, Cragun points out that the combined total of government subsidies to agriculture in the U.S. were about $181 billion in 2009. So one might argue that religion is less sacred than farmers.

CONCLUSIONS?

“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,” Cragun wrote. “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.”

It’s likely that subsidies are propping up religion in the United States, and that many religions that are “near failing” would have gone under already if not for the breaks they get from the government. They also allow religions to be more affluent and influential than they otherwise would be “because they have the resources to fund efforts to change legislation, create widely consumed media and influence public policy,” Cragun wrote.

Could the government spend the money more wisely than the churches? “We are ambivalent on that point, but we do agree with Barb Dempsey, the mayor of Mount Clemens, Mich., who argued that religions should at least pay their fair share for services like fire protection, streetlights, police and roads. They use those services just like other organizations do,” Cragun wrote.

Contact the writer: tsforza@ocregister.com