Supreme Court appears swayed by Catholic charity group’s tax exemption bid

The Supreme Court on Monday seemed swayed by a Catholic charity group’s bid for tax relief in Wisconsin in a case that could drastically alter eligibility for religious tax exemptions. 

A Wisconsin chapter of Catholic Charities, a social services arm of Catholic dioceses nationwide, challenged the top state court’s determination that it does not qualify for a religious tax exemption because it isn’t “operated primarily for religious purposes.”  

Catholic Charities Bureau is controlled by the Diocese of Superior but claims it was denied an exemption from a state unemployment tax because it serves and employs non-Catholics, completes work that could be administered by non-religious groups and doesn’t attempt to proselytize, swaying those it serves to become Catholic. 

Eric Rassbach, a lawyer for Catholic Charities, argued that no court would hold that clergy who preach on Saturday aren’t ministers because preaching on Sunday is more typical, nor would a court suggest that religious leaders who help the poor aren’t ministers because secular leaders help the poor, too.  

“By that measure, Mother Teresa might not qualify,” Rassbach said, suggesting the Wisconsin Supreme Court erred in declining to qualify Catholic Charities for the exemption. 

The justices sharply pressed Wisconsin over its contention that whether a group receives the tax exemption hinges on if it proselytizes or engages in activities that express and instill religious doctrine. 

Justice Clarence Thomas asked Wisconsin’s lawyer, Colin Roth, what changes Catholic Charities would have to make to qualify for the exemption under the state’s perspective. Roth suggested saying the Lord’s Prayer before serving a meal.  

“You don't get the soup unless you pray first,” Justice Samuel Alito interjected. 

Justice Sonia Sotomayor posited that it might be a matter of religious doctrine not to say the Lord’s Prayer before serving a meal, suggesting it would be “problematic” to qualify religious groups that do have that requirement while denying those who don’t. 

"I thought it was pretty fundamental that we don't treat some religions better than other religions,” she said. 

But Roth argued that allowing groups like Catholic Charities to qualify — where their work is largely identical to secular groups in the state — could incentivize states to cut back on religious accommodations altogether.  

“Petitioners’ theory ultimately leads to an all-or-nothing rule exempting all religious groups or not,” he said.  

The justices did weigh the limits of such exemptions. Justice Ketanji Brown Jackson posed a hypothetical in which a religion views eating meat as a sin and opens a vegetable-only restaurant. 

“Do they have a claim to be exempt from state taxes, food taxes, everything else?” she asked. “Because that’s a...sincerely held belief and it’s important to them and you’re going to be taxing them — you're going to be taxing the exercise of their beliefs.”  

She also asked whether motivation should factor in deciding who’s exempt, such that if one vegan restaurant was underpinned by faith and another was not, only the former would receive the exception. 

Justice Amy Coney Barrett questioned how to distinguish religion from nonreligion under the law, quipping that the high court would not wade into religious philosophy in its opinion. 

"That’s kind of a big question, right?” she joked.  

Rassbach pointed to a “duty” owed or obligation to something “transcendent” or “supernatural” as the distinction. 

Deputy Solicitor General Curtis Gannon, who argued for the government, urged the justices to take a narrower view. He said the plain law has two clear prongs: that any group receiving the exemption must be controlled by a church and operate for primarily religious purposes. 

The justices should stop short of defining religious and non-religious work and instead find the Wisconsin Supreme Court’s erred in its interpretation of the law regarding Catholic Charities, he said.  

“Second guessing what counts as inherently religious is just something that courts shouldn't be in the business of doing,” Gannon said, “and so that's a problem for a court to be defining what is inherently religious.” 

The tax exemption case is the first of three religion cases to be argued this term. The justices will also weigh whether parents of children in public school can opt out of LGBTQ book instruction and whether an online Catholic school can become a charter school in a nationwide first. 

In recent years, the Supreme Court has handed a string of wins to churches and religious plaintiffs in disputes with states.  

A decision is expected this summer.