US Supreme Court hears oral argument on religious exemptions from federal tax News
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US Supreme Court hears oral argument on religious exemptions from federal tax

The US Supreme Court heard oral arguments Monday for a Wisconsin Catholic charity requesting a religious exemption from an unemployment insurance tax.

Catholic Charities Bureau, the petitioners, argued that Wisconsin law disfavored Catholic Charities because the organization served and hired non-Catholics and did not proselytize, meaning that they did not engage in typical religious activities.

Justice Ketanji Brown Jackson questioned whether the “religious purposes” part of the statute is really about the motivation of the activity, but instead the types of activities the organization undertakes. She prompted the petitioners to look to the legislative history of the federal provision. She noted that the distinction is between organizations that proselytize and organizations that do not proselytize. The petitioners reiterated that their argument relied on “not discriminating along theological lines” within the religious exemption, rather than deciding if something is religious at all.

Justice Elena Kagan is also concerned that the religious exemption suggested by the petitioner puts pressure on the governance choices of churches, which she questioned, that the church autonomy doctrine sought to provide relief.

Respondents, the Wisconsin Labor and Industry Review, noted that the petitioner’s “motive only” test would leave over a million employees at religious affiliated institutions, such as nurses or janitors, without unemployment insurance. Typically, the benefits for these employees can be determined without confronting the religious exemption doctrine, but this would be in jeopardy if petitioner’s test prevails.

“Petitioners’ theory ultimately leads to an all-or-nothing rule, exempt all religious groups or none. Such a rule could incentivize legislatures to cut back on religious accommodations altogether,” said the respondent counsel Colin Roth.

Respondent also contended that the doctrine narrowly covered state compulsion cases.  They then noted the state’s compelling interest is making sure there is as broad unemployment insurance as possible. Finally, they argued that the First Amendment did not prohibit all entanglement of churches, but only ones that involved excessive “surveillance of church activities.”

The court will make a final ruling on the case during the 2024-2025 term.

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