Taxes shaped early Latter-day Saint history by enabling religious competition that framed the world in which Joseph Smith lived. For example, tax policy influenced the Second Great Awakening, exempted early preachers, and continues to shape how temples, tithing, and missionary work are treated under the law. In this interview, tax law scholar Samuel D. Brunson explores the intersection of finance, governance, and faith in Latter-day Saint history.
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Table of Contents
- Historical Foundations
- Early Mormonism and Property Taxes
- Tithing Systems
- Tool of Morality
- Financial Transparency
- Understanding and Misunderstanding
Historical Foundations of Church and State
How did taxes influence the First Vision?
Taxes were not unilaterally responsible for the explosion of religious fervor in the late eighteenth and early nineteenth centuries, but they were one factor. Before disestablishment (the elimination of a state-established church), in many states, the established church could collect taxes either from its members or from community members at large.
As that tax-collecting ability declined, entrepreneurial pastors and churches had to find other sources of revenue. When Americans could join any church—or none at all—and when no church had the apparatus of the state supporting it, smaller and disfavored religions could and did compete for members.
And Joseph Smith’s First Vision happened in the milieu of the Great Awakening.
Why did Joseph Smith’s family reject church taxes?
Here we come back to church taxes. In Vermont in the late eighteenth century, communities could implement church taxes to support the local Congregational Church if a supermajority of residents voted in favor of the church tax.
But Vermont provided an exception for residents who were participating members of another denomination. If they brought a certificate stating they were members of another church, and that certificate was signed by clergy from that church, they were excused from paying the church tax.
In 1797, the Turnbridge Universalist Society’s seventeen members, including Joseph Jr.’s grandfather Asael and his father Joseph Sr., presented a certificate to gain that exemption. (It’s worth noting that, a year later, Asael was back in the Congregational Church.)
How did lost revenue fuel the Second Great Awakening?
Without an established church and a church tax collected by the state, churches had to compete for members and the dollars that came with them. This was not the sole reason for the Second Great Awakening, but it played a part.
Early Mormonism and Property Taxes
Who claimed a tax exemption with Joseph Smith’s signature?
In the early nineteenth century, New York law provided a property tax exemption to “ministers of the gospel” and “any priest of any denomination whatsoever.”
Within months of the formation of the Church of Christ, an unnamed member presented a certificate signed by Joseph Smith and Oliver Cowdery to the tax assessor as evidence that he was a minister of the gospel and thus exempt from property tax.
How did the Kirtland temple avoid property taxes?
The Kirtland temple functioned differently from today’s Latter-day Saint temples. Rather than a private space open only to church members with temple recommendations, it hosted public worship. That ended up being advantageous to the church from a tax perspective: Ohio law at the time exempted some real property owned by religious organizations from property tax. To take advantage of the exemption, the property had to be used either as a meetinghouse or a burial ground.
This type of exemption—often framed as an exemption for property used for “public worship”—has tripped the church up until today.
While temples in the U.S. always enjoy property tax exemptions, in the UK, temples are not fully exempt. That is because they don’t qualify as buildings used for public worship; the limitations on access have tax costs to the church.
How did the Kirtland Safety Society benefit from not having a charter?
The losses by the Kirtland Safety Society were likely inevitable; the Panic of 1837 led to the failure of about a quarter of chartered banks nationwide.
Of course, the Kirtland Safety Society was not a chartered bank. And in Ohio, that meant it didn’t have to pay a 5 percent tax on dividends it paid or a 20 percent penalty tax. Those benefits were dwarfed by the costs of collapse, but it was, at least, a small savings!
Theocratic Experiments and Tithing Systems
How did the Church separate tithing from taxes?
Even when the church operated a theocratic government (in Nauvoo and in the Territory of Deseret), it separated taxes from tithing. The church and its leaders have consistently treated raising revenue for the Kingdom of God differently from raising revenue for an earthly state.
So in Nauvoo and then again in Deseret, church leaders wrote tax laws that used tax assessors and tax collectors to assess and collect taxes separate from the system of tithing, which went through bishops.
Why did Joseph Smith frame redress as a taxpayer issue?
Throughout US history, various marginalized groups have used their status as taxpayers to argue that they belong and that they have equal rights and dignity as other citizens of the country.
The Mormons were no different—as Joseph Smith reached out to various states and groups to vindicate the Mormons’ property rights, part of his argument was that the Mormons were worthy of assistance because they were taxpayers. And as taxpayers, they had rights equal to anybody around them.
Tax Law as a Tool of Morality
How was polygamy used to deny a tax exemption?
This is a story probably mostly of interest to me. In 2012, the IRS denied a tax exemption for an organization called Principle Voices of Polygamy. The organization was an advocacy group, organized to both support polygamist families and educate the public about polygamy.
Why did the IRS deny its exemption? It wasn’t because Principle Voices violated any statutory provisions. Rather, it was because polygamy violates public policy and law.
In the 1970s, the IRS decided that violations of public policy were inconsistent with tax exemption, a principle affirmed by the Supreme Court in Bob Jones University. That doctrine is most often used to deny exemptions to racially discriminatory schools, but because polygamy is also against public policy, the IRS ruled against Principle Voices as well.
Church, State, and Financial Ambiguity
Why did churches oppose financial disclosure laws?
In the late 1960s, Congress was concerned about a series of scandals involving tax-exempt organizations. So, it made a series of significant changes to the rules governing tax exemption. One thing the House of Representatives did was change the law, requiring churches to make certain public financial disclosures.
Churches freaked out. When the bill moved to the Senate, the Church of Jesus Christ of Latter-day Saints, the Catholic Church, and other churches lobbied against the provision. At one point, Ernest Wilkinson, then president of BYU, appeared in front of Congress, testifying against the changes.
Ultimately, the churches won. The Senate stripped the church disclosure requirements from the bill. And even today, churches are exempt from the disclosure requirements that apply to most other tax-exempt organizations.
What’s at stake in losing a tax exemption?
The Church values its tax exemption and actively works to protect it. Several sections of the Church Handbook caution members and leaders not to risk the exemption.
During debates over same-sex marriage, some advocates argued that churches opposing marriage equality should lose their exemptions—not based on law, but as a public pressure tactic.
The Church argued that stripping its exemption for religious positions would violate its religious freedom—a defense rooted in First Amendment protections, even though no legal precedent supported the threat at the time.
Why are missionaries hard to classify for tax purposes?
The Church of Jesus Christ of Latter-day Saints isn’t the only missionary church. Missionaries tend to come in two flavors: volunteer and paid missionaries. And naturally, it makes sense that volunteer missionaries don’t owe taxes (because they’re not being paid!) while paid missionaries do owe taxes on their compensation.
But Latter-day Saint missionaries straddle these two categories. We think of ourselves as volunteer missionaries. After all, we pay our own way!
At best, they fit uncomfortably in the margins.
Except… since 1991, we haven’t paid our own way. Instead, we contribute a set amount monthly to the missionary fund (a set amount deductible for members who itemize). Then, the Church provides housing and some spending money for each missionary.
Does that mean we have a paid missionary force? Not rhetorically, of course. But we kind of do. Only we don’t entirely. So, at best, Latter-day Saint missionaries fit uncomfortably in the margins between volunteer and paid missionaries. (For what it’s worth, US tax law does treat Latter-day Saint missionaries as volunteer missionaries.)
Institutional Understanding and Misunderstanding
Does the IRS understand churches—and vice versa?
The short answer is, no, the IRS doesn’t understand churches.
But the question merits a longer answer, too. The U.S. Constitution actually puts up a barrier to the IRS understanding churches, which is almost untenable in light of the tax law.
The tax law provides certain special privileges for churches that don’t apply to other tax-exempt organizations, including non-church religious organizations. The broad ones are
- Churches don’t have to apply for tax exemption. Instead, they’re automatically exempt.
- Churches don’t have to file information returns with the IRS.
- There are special hoops the IRS has to jump through before it can audit a church.
But the Religion Clauses of the Constitution significantly limit the government’s ability to evaluate whether an organization is a church or not. The IRS has to give special treatment to churches, but can’t robustly determine whether an organization is a church. It then faces a gigantic catch-22.
So, the IRS has developed a 14-criterion test to determine whether something is a church. Courts have devised alternative tests. But if an organization claims to be a church and could plausibly be a church, the IRS will treat it as such.
As for the Church’s understanding of the IRS?
Largely, I think, the Church of Jesus Christ of Latter-day Saints does understand the IRS. There’s no mirror constitutional impediment for a church to understand the state. And the Church has the legal and practical sophistication, borne of its 200 years of history as well as its membership in government and the private sector, to understand the IRS.
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About the Scholar
Samuel D. Bruson is the Georgia Reithal Professor of Law and Associate Dean for Academic Affairs at Loyola University Chicago School of Law. A nationally recognized tax scholar, Brunson holds a JD from Columbia School of Law and writes extensively on the intersection of religion, law, and finance. He is the author of Between the Temple and the Tax Collector: The Intersection of Mormonism and the State, and his research on tax-exempt organizations and Latter-day Saint financial history has been published by Cambridge University Press and leading law reviews.
Further Reading
- Brigham Young and the First Federal Income Tax
- How Important Was ZCMI to Utah Pioneers?
- Approaching Zion: Is Hugh Nibley’s Vision Realistic?
- What Do Historians Think About Brigham Young?
- Did Parley P. Pratt Leave the Church?
Latter-day Saint Money and Taxes Resources
- Between the Temple and the Tax Collector: The Intersection of Mormonism and the State (University of Illinois Press)
- Mormon Profit: Brigham Young, Tithing, and the Bureau of Internal Revenue (BYU Law Review)
- Tax Exemptions for Religious Institutions (Radio West)
- First Presidency Statement on Church Finances (Church Newsroom)
- Whistleblower Alleges $100 Billion Secret Stockpile by Mormon Church (Religion Unplugged)
