Kasper, German Bishops, and the Church Tax

October 4, 2014 by Amy Welborn

In this age of 24-7, can’t escape information-mongering, it is amazing (or perhaps not) that actually reporting continues to suck.

Take this whole Synod on the Family thing.

Obviously, there is a lot of discussion regarding the Synod, much of that discussion being driven by Cardinal Kasper of Germany, who is just going on and on and on about compassion and mercy and such.

Plenty of people are talking about all of that. What hardly anyone is doing, however is even trying to move beyond the ideological narratives, and raising questions about the German church tax.

For that is really the most pressing issue facing the German Catholic Church. And I really wonder why any of our highly-praised religion journalists are completely ignoring this issue and don’t even seem interested in connecting the dots or even asking Cardinal Kasper directly about how the Catholic Church in Germany understands and practices issues related to Church membership and the sacraments. And taxes.

Here’s the deal. I’m going to use the explanation of the German Church Tax that I found on a Mormon blog. It’s clear and helpful:

…religious organizations in Germany can qualify to be treated as public law corporations. Public law corporation status provides a number of benefits, including exemption from income, inheritance, and gift taxes, the right to employ clergy as civil servants in various public facilities, and exemption from bankruptcy laws. In addition, public law corporations can impose the Church Tax on their members.

Churches actually get to draft their own tax ordinances (though the ordinances must be approved by the state). Generally, state statutes provide forms that these Church Taxes can take, including income, wealth, and property taxes. Though churches are technically responsible for collecting the tax themselves, they can—and usually do—enlist the state’s help. The government collects the tax through its wage withholding, then, after keeping a service fee, remits the rest of the Church Tax to the relevant church. When the Church Tax is imposed on a member’s income, it’s levied as 8 to 9 percent of her federal income tax liability, which amounts to between 3 and 4 percent of her income.

Recent changes have raised awareness of the tax and the exodus from formal church affiliation has been growing:

…in 2012, a German court held that churches could bar people who stopped paying the tax (by civilly withdrawing from the church) from participating in church activities, including becoming godparents and joining church-run clubs.

Second, church members will no longer be able to avoid paying the Church Tax on their capital gains. While technically it has always been imposed on capital gains, in the past, banks waited for customers to volunteer their religious affiliation. Under new rules, banks are required to report their customers’ affiliation, rather than wait. That is, while the underlying law hasn’t changed, the enforcement mechanism has just improved.

From the TaxProf Blog, quoting from a WSJ article:

German church members must pay an additional 8% to 9% of their gross annual income tax and capital gains tax bills to the church. That is typically steeper than in many other parts of Europe. A registered believer, for instance, paying a 30% income tax rate, or €30,000, on an income of €100,000, would pay another €2,400 to €2,700 in church tax. …

While the church tax had officially always been due on capital gains, it had never been properly enforced. Under the new rules, which the churches lobbied for, banks will be required to report their customers’ religious affiliations, rather than wait for customers to volunteer the information. “We’re not doing it for the additional revenue,” said Thomas Begrich, finance chief for the Protestant Churches of Germany, or EKD, defending the change. “The wealthy need to pay their fair share.”

The WSJ article is here. I’m not sure if it’s behind a firewall or not for everyone, so I provide the link to the TaxProf blog as well.

So far this year, the number of Germans leaving the country’s Protestant and Catholic churches has reached its highest level in 20 years, twice last year’s level—a surge many clergy and finance experts blame on the changes in how the tax is levied.

German tax authorities collect an 8 or 9 percent premium on churchgoers’ annual tax bills and channel it to the faiths to pay clergy salaries, charity services and other expenses. Members must officially leave the church to avoid paying this.

Under a simplified procedure starting next year, banks will withhold that premium from church members earning more than 801 euros ($1,055) in capital gains annually and pass it on to tax authorities for distribution to the churches.

Letters from banks announcing the new procedure this summer and asking clients for their religious affiliation — so they can earmark funds to the right churches — have worried many members. Churches have scrambled to explain the changes.

“Nobody has to get angry and leave the church,” the Lutheran diocese of Braunschweig pleads on its website.

“I’m surprised because this isn’t a tax rise but just a new procedure,” Rev. Karl Juesten, the Catholic liaison official with parliament in Berlin, told the magazine Christ & Welt this week. “We should have become active earlier.”

Discussing the large sums involved is difficult for the churches, maybe more so now for Catholics because Pope Francis says he wants “a poor church for the poor” and makes a point of living in a simple apartment and riding in ordinary cars.

EMPTYING PEWS

National statistics are not yet available, but individual cases reported in recent weeks illustrate the problem.

For example, both the Lutheran diocese in Berlin and Stuttgart’s Catholic diocese reported a 50 percent jump in departures in the first half of 2014. That means about as many quit in only six months as had left in a full year before.

Some clergy have accused financial advisers of telling clients to quit their churches if they don’t want to pay up, a step that would have them barred from receiving the sacraments, being married in church or having a religious burial.

The banks replied with prompt and sharp denials.

“The churches are trying to get off easy. They should ask themselves why such a personal decision as belonging to a church is reduced to the issue of capital gains tax,” said Thomas Lange of the local banking association in Duesseldorf.

From a column at the Catholic Thing:

Some European journals are also calling for a reconsideration of the close financial link between Church and State in Germany. The Church draws a hefty income from this so-called church tax, and the clergy are paid rather large salaries by the state. Most Americans would be a bit shocked to learn that German bishops make between €8000 ($10,965) and €11,500 ($15,763) a month, depending upon their seniority. That comes to between $131,000 and $189,000 a year. Priests make less – but still far more than their American brother priests.

Der Spiegel is certainly not objective, but when you sort through the biases, you can get a sense of the financial..er…complexity of the Catholic Church in Germany. The “Bishop of Bling” was only the most excessive of an excessive, wealthy bunch.

All right, then, you get the picture. The German Catholic Church is a big business (the country’s second-largest employer) and it’s income is considerable. There are various sources for that income, but a huge part of it is the church tax. Fewer registered members? Less income.

That’s one thing But here’s the other thing to keep in mind as you hear Cardinal Kasper talk. And talk and talk.

(Well, first you should be wondering why the head of a national church that is dying should have this constantly-turned on microphone on this issue. Why are we even listening to him? Aren’t we supposed to be listening to the Church from places where it is actually alive and growing? What happened to We’re-not-a-Western-European-Church-We’re-a-Global-Church?)

Okay, back to Germany. Here’s how the German bishops responded to the growing exodus. Back in 2012, they issued a decree.

This decree declared that if you’re Catholic, and you un-register with the German government and don’t pay the church tax…you’re basically excommunicated. From, you know, the Eucharistic Table of the Lord. You can’t be buried out of the Church unless you’ve repented. Heck, you can’t even chair the social committee:

From CNS:

“Conscious dissociation from the church by public act is a grave offense against the church community,” the decree said.

“Whoever declares their withdrawal for whatever reason before the responsible civil authority always violates their duty to preserve a link with the church, as well as their duty to make a financial contribution so the church can fulfill its tasks.”

The document added that departing Catholics could no longer receive the sacraments of penance, holy Communion, confirmation or anointing of the sick, other than when facing death, or exercise any church function, including belonging to parish councils or acting as godparents.

Marriages would granted only by a bishop’s consent and unrepentant Catholics would be denied church funerals, the decree said.

So yes, the de-registration is being interpreted as a formal defection from the Church. Of course then, one does not receive the sacraments if one has taken this step. But in the German context, there might be other reasons a Catholic would de-register which might have to do with, say, distrust of the national Church’s structure and unwillingness to support it, from either a liberal or conservative perspective.

Update: I am fuzzy on whether the 2012 decree is actually in force. The German bishops at the time declared it was approved by the Vatican, which had, a few years previously declared that the practice was not valid. Rome had declared in 2006, but this digging-in-the-heels German statement was in 2012. A discussion of it here.

Does all of this invalidate anyone’s statements or perspective? Of course not. But it is all very interesting, and seems to me very important context.