A divided state Supreme Court ruled Thursday that exemptions allowing religious organizations to avoid paying Wisconsin’s unemployment tax don’t apply to a Catholic charitable organization because its on-the-ground operations aren’t primarily religious, the Associated Press reports.
The outcome of the case, which drew attention and concern from religious groups around the country, raises the bar for all religions to show that their charity arms deserve such exemptions in the state. The Catholic organization’s attorneys immediately promised to appeal directly to the U.S. Supreme Court. If that court agrees to hear the case, any ruling could have broad national implications.
The Wisconsin court ruled 4–3 that the Superior-based Catholic Charities Bureau and its subentities’ motivation to help older, disabled, and low-income people stems from Catholic teachings but that its actual work is secular.
U.S. religious institutions enjoy tax exemptions, most notably from property taxes. Debate has raged for decades over whether the exemptions are fair.
Supporters say that the exemptions rightfully extend from the constitutional separation of church and state and that religious institutions would struggle without them. Opponents counter that they amount to government support for religion and unfairly shift tax burdens to others.
The dispute over Wisconsin unemployment tax exemptions is the first of its kind, but challenges to religious property tax exemptions have been fairly common. Wisconsin law requires employers to pay an unemployment tax that is used to fund benefits for workers who lose their jobs. The law exempts religious organizations from the tax.
