The U.S. Supreme Court has agreed to hear a case that could have significant implications for religious freedom, particularly regarding whether church-affiliated charities and businesses should be exempt from paying state unemployment taxes for their employees. Currently, most states exempt churches and church-run programs from unemployment taxes if their activities are primarily religious.
However, affiliated institutions like schools, hospitals, and businesses that do not directly engage in religious services are typically required to pay these taxes. The case from Wisconsin will address whether states must defer to religious authorities when determining exemptions for such organizations.
The dispute originated with several nonprofit corporations in Wisconsin that are funded by state and federal grants to provide services for individuals with developmental disabilities. These nonprofits, now overseen by Catholic Charities, are seeking an exemption from unemployment taxes, arguing that their work is driven by religious beliefs and the church’s mission.
Their legal team contends that the government cannot impose unemployment taxes on these organizations, especially considering that the church already has its own unemployment coverage system in place.
Supreme Court to Decide if Church-Affiliated Charities Can Avoid State Unemployment Taxes
The Wisconsin Supreme Court, however, ruled 4-3 against the Catholic Charities, stating that the programs in question were charitable and educational but not primarily religious.
This decision led to an appeal, with the Becket Fund for Religious Liberty urging the Supreme Court to overturn the state ruling, emphasizing that forcing religious entities to pay unemployment taxes violates their constitutional rights to religious freedom.
This case comes before a court that has historically supported religious claims in several key decisions. In recent years, the Supreme Court has ruled in favor of religious organizations in various contexts, such as allowing churches to access state benefits, exempting religious employers from certain regulations, and affirming the right of religious organizations to define their own mission and practices. This trend suggests that the court may be inclined to rule in favor of religious exemptions in the current case.
Religious groups, including the Catholic Conference of Illinois, have joined in urging the court to hear the case. They argue that the Wisconsin ruling severely infringes upon religious liberty and the First Amendment’s protections.
The case is expected to be argued in the spring of 2024, with a decision likely by the end of June. Legal advocates for Catholic Charities assert that penalizing religious organizations for their charitable work, especially when they serve both religious and non-religious individuals, is unjust.
