Supreme Court takes tax case related to Catholic groups helping people with developmental disabilities
The Wisconsin Supreme Court said the charitable arm of a Catholic diocese is not operating mainly for religious purposes and not exempt from unemployment taxes.
WASHINGTON − The Supreme Court will decide whether the work of the charitable arm of a Catholic diocese is sufficiently religious to be exempt from unemployment taxes, a case being closely watched by religious groups around the country.
The case the court agreed to hear involves Catholic Charities Bureau and four independently incorporated organizations controlled by the diocese in Wisconsin that serve people with developmental and mental health disabilities.
Similar to other states, Wisconsin exempts from its unemployment tax system organizations “operated primarily for religious purposes and operated, supervised, controlled, or principally supported by a church or convention or association of churches.”
The Wisconsin Supreme Court ruled 4-3 that the organizations at issue should have to pay into the state’s unemployment system because they are not operated primarily for religious purposes, even if the services are religiously motivated.
People who get the agency's social services don’t receive religious instruction and employees don’t have to be Catholic.
The subsidiary organizations receive no funding from the diocese. Their services – including job training, placement and coaching – can be provided by groups with either religious or secular motivations, the state Supreme Court said, “and the services provided would not differ in any sense.”
“If we looked to the church's purpose in operating the organization only, then any religiously affiliated organization would always be exempt,” Wisconsin Supreme Court Justice Ann Walsh Bradley wrote for the majority.
But lawyers for the Becket Fund for Religious Liberty, who are representing the diocese, said that what Walsh was essentially – and incorrectly – saying is, “it doesn’t matter if Catholic Charities gives a cup of water in Jesus’ name, because non-religious charities offer cups of water too.”
“It shouldn’t take a theologian to understand that serving the poor is a religious duty for Catholics,” Eric Rassbach, vice president and senior counsel at Becket, said when the group filed its appeal. “But the Wisconsin Supreme Court embraced the absurd conclusion that Catholic Charities has no religious purpose. We’re asking the Supreme Court to step in and fix that mistake.”
Wisconsin Attorney General Joshua Kaul said there was no mistake.
The Wisconsin Supreme Court, Kaul said in a filing, correctly applied a neutral state law that “imposes no constitutionally significant burden on their religious exercise.”
“Courts routinely deny religious tax exemptions to entities that assert religious motivations without overly entangling themselves in religious matters,” he told the high court.
The case, Catholic Charities Bureau v. Wisconsin Labor and Industry Review Commission, is expected to be decided by summer.