This chapter begins the transition from empirical to normative concerns, explaining and evaluating the diverse pattern of taxing and exempting churches and other religious institutions. Entanglement concerns help to explain this diversity. This chapter identifies which taxes carry the greatest (and least) threat of church-state entanglement. It also discusses why entanglement should be an important consideration when deciding to tax or exempt religious institutions. Either taxing or exempting churches and sectarian entities involves entanglement. Central to this discussion are such tax policy criteria as revenue, administrability, valuation concerns, taxpayer liquidity, public acceptability, and economic neutrality. The federal and state tax systems do a reasonable job of taxing churches where the possibilities for enforcement entanglement are least and of exempting churches where the prospects for enforcement-related entanglement are greatest. Our federal system of decentralized legislative decision-making works reasonably well to make the imperfect trade-offs inherent in taxing and exempting religious entities.
The Improvement Assessment of the Tax Capacity of Regions in Uzbekistan