Should Catholic Hospitals Remain Tax Exempt?
On the heels of the Catholic Health Association’s endorsement of Obamacare comes another precedent-setting decision affecting Catholic hospitals and other institutions.
The Illinois Supreme Court ruled Thursday that a Catholic hospital in downstate Urbana is not entitled to exemption from local property taxes because, among other things, it failed to devote enough of its resources to charity care of patients:
Provena Covenant Medical Center, one of six hospitals in the Provena Health system, had fought for six years to regain the tax exemption stripped from it in 2003 by a local tax board. Since then the hospital has been paying more than $1 million per year in local property taxes. The case was being watched by Catholic hospitals around the nation because of its precedent setting potential, and the Catholic Health Association intervened in the case.
I have to admit my reaction to this decision is mixed, because it could be interpreted two ways. On the one hand, it could be construed as a bad if not downright evil decision, representing yet another attempt by Big Government to control Catholic institutions or drive them out of business.
On the other hand, it could be interpreted as a difficult but necessary decision, or even as a sort of poetic justice for CHA’s collective decision to endorse government-funded health care at the cost of compromising clear Catholic teaching. It also raises the question of whether tax exemption for Catholic institutions in general has outlived its usefulness.
There is no question that removing tax exemption from Catholic institutions will greatly add to their expenses and may drive some into bankruptcy. It would require Catholics — especially middle and upper class Catholics — to increase their generosity to such institutions at the exact moment when the government is demanding more of their hard-earned money as well. Plus there likely soon will be the added insult to injury of those tax dollars (at least at the federal level) going to directly subsidize the moral outrage of abortion.
Yet it could also be argued that the economic benefits of tax exemption have come at the cost of muting or compromising the Church’s ability to preach the Gospel “in season and out of season.” Internal Revenue Service rules allow churches and other non-profit organizations to discuss issues but not to endorse or criticize specific political figures or candidates by name. However, concern about running afoul of the tax exemption rule has made many pastors fearful of even addressing political issues such as whether Catholics can ever morally justify voting for a pro-abortion or pro-gay marriage candidate. In addition, tax exemption rules and the threat of having tax exemption withdrawn seem to have been selectively invoked or enforced against churches with socially conservative teachings but rarely or never against churches with socially liberal teachings (e.g. Rev. Jeremiah Wright’s Trinity Church, Fr. Michael Pfleger’s St. Sabina) that explicitly endorse liberal candidates for office.
The one group of Catholic institutions that has historically forgone tax exemption is the Catholic Worker movement. Catholic Worker founder Dorothy Day believed that works of charity should be done for their own sake and that the government should neither encourage nor discourage them. To this day most Catholic Worker houses and other ministries are not 501(c)(3) tax exempt, and contributions to them are not tax deductible.
The Sisters who operate the Provena Health system belong to three separate religious communities — the Franciscan Sisters of the Sacred Heart, the Servants of the Holy Heart of Mary, and the Sisters of Mercy of the Americas. All appear to be affiliated with the Leadership Council of Women Religious, while the “leadership team” of the Sisters of Mercy of the Americas is among those that explicitly endorsed Obamacare in this letter (http://www.networklobby.org/press/3-17-10HealthcareSistersLetter.htm).
Also, one should not assume a direct connection between the CHA/LCWR Obamacare endorsement and the court decision, since the court decision was merely made public yesterday, but was likely made some time ago.
With those caveats in mind, however, I still could not help but feel that if the decision is a slap in the face to the CHA, it is in some ways a deserved one. If Catholic hospitals want to operate like any other business — complete with six-figure-salaried trade association CEOs — perhaps they should start paying taxes like any other business. If CHA members and the religious orders to which many of them belong really believe government funded healthcare is so wonderful that they are willing to literally sell their souls for it, perhaps it is only fair that they help pay for it like the rest of us.
For Catholic hospitals and other institutions to give up tax exemption or have it taken away from them would be a form of economic martyrdom that many would not survive. It should not be taken lightly. But could it also function as a needed corrective? What are your thoughts on this issue?