Part 1 of this essay discussed historical, social, and policy reasons for retaining tax exemptions for religious organizations. (See Part 1.) Part 2, in addition to presenting constitutional concerns, discusses several points regarding taxes and tax exemptions that Christians should keep in mind as they engage publicly on the tax-exemption issue. Each of the reasons discussed in Parts 1 and 2 provides justification for tax exemptions.
5. Religious Organizations Do Not Produce Income or Distribute Profits to “Owners.”
Nonprofit organizations (including tax-exempt organizations) and for-profit organizations differ fundamentally in how they generate revenues and distribute income or surpluses (net earnings), and thus different treatment in the law is warranted. For-profit organizations generate revenue by attracting investments from those seeking return on capital they invest, and they distribute profits to their investor-owners, for whose benefit they operate. By contrast, tax-exempt, nonprofit organizations may not distribute “profits” or net earnings to those who control or own them. In other words, with tax-exempt, nonprofit organizations, no net earnings or surpluses may inure to the benefit of any private individual.
This private-inurement constraint is specified in § 501(c)(3) of the Internal Revenue Code. To be tax exempt under this federal code section, an organization must be organized and operated exclusively for exempt purposes, and “no part of the net earnings . . . [may] inure to the benefit of any private shareholder or individual.” With these organizations, any surpluses must remain devoted to exempt purposes or ends that are beneficial to society.
A consequence of the private-inurement constraint is that tax-exempt, nonprofit organizations are restricted in their ability to generate revenues because they cannot attract investments from investors seeking investment return. These organizations, instead, rely upon dues, tax-exempt bond financing, tax-deductible gifts, tax exemptions, and some fees for service as the primary means of generating the financial resources to operate. By immunizing these organizations from federal and state income taxes and from state property, sales, and use taxes, exemptions allow these organizations to generate and reinvest surpluses (net earnings) in facilities and services and to build up reserves, thereby protecting the long-term financial viability of these organizations and ensuring that they are able to continue to benefit society and beneficiaries.
Some analysts, drawing on economic theory, argue that tax exemptions are subsidies that provide financial support to nonprofit organizations beyond the financial resources they generate from donations and other permissible sources. The subsidy theory is, however, ill-suited for analyzing tax exemptions for religious organizations, and the Supreme Court has refused to characterize tax exemptions for religious institutions as direct government subsidies, stating that tax exemptions “constitute mere passive state involvement with religion and not the affirmative involvement characteristic of outright governmental subsidy.” Furthermore, identifying and measuring the “income” of nonprofit organizations present their own difficulties because these organizations rely on sources such as dues, endowment income, and gifts for funding to operate and because they are organized and operated for exempt purposes, not a profit motive.
6. The Government’s Power to Tax Includes the Powers to Control and Even Destroy.
Nearly two centuries ago, in McCulloch v. Maryland, Chief Justice John Marshall stated that “the power to tax involves the power to destroy.” He recognized that, if a state were allowed to tax a bank established by Congress, the state would wield the power to destroy the bank and act in a manner hostile to and incompatible with the power of Congress to create and preserve the bank.
Additionally, the power to tax includes the power to control and suppress behavior. When government exercises its regulatory power and imposes tax liabilities, government wields the power to control and coerce conduct and the power to undercut the financial viability of regulated entities by exposing them to the “hazard” of losing their property and other consequences for not paying taxes.
Although government may at times exercise these powers even-handedly and benignly, government may at other times exercise these powers unjustly and malignantly. As the Supreme Court has observed:
Governments have not always been tolerant of religious activity, and hostility toward religion has taken many shapes and forms—economic, political, and sometimes harshly oppressive. Grants of exemption historically reflect the concern of authors of constitutions and statutes as to the latent dangers inherent in the imposition of property taxes; exemption constitutes a reasonable and balanced attempt to guard against those dangers.
Because of the significant effects the exercise of these powers can cause, government must take care to guard against abuse of these powers and temper against harsh effects. Accordingly, by exempting and thereby immunizing religious organizations, government guards against potential abuse and oppressive action, and it disables itself from interfering in religious matters, controlling the conduct of religious organizations, and taking action that could destroy them.
7. In the Western Legal Tradition, Church and State Have Exercised Differentiated Authority and Have Developed Their Own Distinct Legal Systems, and by Granting Tax Exemptions, Civil Governments Have Honored the Distinct, Overlapping, and Sometimes Competing Jurisdiction of Religious Institutions.
Nearly three decades ago, legal historian Harold J. Berman observed that “[p]erhaps the most distinctive characteristic of the Western legal tradition is the coexistence and competition within the same community of diverse jurisdictions and diverse legal systems.” He added that the plurality of jurisdictions and legal systems in the Western legal tradition “originated in the differentiation of the ecclesiastical polity from secular polities.” Thus, in this tradition, although churches and religious organizations coexist in communities with secular governments, they are a distinct jurisdiction, and they like secular governments have the power to declare law (e.g., ecclesiastical law).
This distinctive is reflected in the American constitutional order. For instance, in McCulloch v. Maryland, in which the Court considered the authority of a state to tax a federal bank, Chief Justice Marshall opined that “[a]ll subjects over which the sovereign power of a state extends, are objects of taxation; but those over which it does not extend, are, upon the soundest principles, exempt from taxation.” Although Marshall’s reasoning in that case applied to a dispute between federal jurisdiction and state jurisdiction, it has implications for civil government’s jurisdiction vis-à-vis religious organizations: Should civil government in the United States tax religious institutions, government would be treating these institutions as its subjects subordinate to its sovereign power.
The First Amendment to the United States Constitution honors the jurisdictional boundaries between church and state and thus reflects this tradition. The First Amendment prohibits Congress (and now state and local governments under the incorporation doctrine) from making any “law respecting an establishment of religion, or prohibiting the free exercise thereof.” The Establishment Clause, which is actually only a phrase, may be interpreted as a provision securing individual rights or a provision structurally restraining governmental power. Law professor Carl H. Esbeck has explained that the Establishment Clause, interpreted as a structural restraint, “negate[s] from the purview of civil government all matters ‘respecting an establishment of religion’” and “constrain[s] the branches of government to act only within the scope of their delegated powers.” He added:
An important consequence of attributing structural characteristics to the Establishment Clause is that it acknowledges the existence of a competency centered in religion that is on a plane with that of civil government. Stated differently, the Establishment Clause presupposes a constitutional model consisting of two spheres of competence: government and religion. The subject matters that the Clause sets apart from the sphere of civil government—and thereby leaves to the sphere of religion—are those topics “respecting an establishment of religion,” e.g., ecclesiastical governance, the resolution of doctrine, the composing of prayers, and the teaching of religion.
This jurisdictional/structural-restraint reading is not so far from what the Supreme Court recently said in the Hosanna-Tabor case about a line of its precedents. It observed that “our opinion in Watson [v. Jones] ‘radiates . . . a spirit of freedom for religious organizations, an independence from secular control or manipulation—in short, power to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine.’”
Although the Hosanna-Tabor case involved a ministerial exception under Title VII of the Civil Rights Act of 1964 and the First Amendment, the Court’s reliance on the Watson v. Jones/Kedroff v. St. Nicholas Cathedral line of precedents emphasizes the constitutional importance of jurisdictional boundaries and the independence of religious institutions. Accordingly, tax exemptions help government to avoid jurisdictional clashes that would result from it treating religious institutions as subjects and exerting sovereign power over them. Tax exemptions also help to ensure the independence of religious institutions and keep them free of government control and interference.
8. Because Religion Has Both Personal and Institutional Dimensions, Religious Freedom Has Both Personal and Institutional Dimensions That State Constitutions and the United States Constitution Have Safeguarded.
Law professor Edward M. Gaffney, Jr. has explained that the system of tax exemptions that has existed throughout the United States is “constitutional in the sense that [it] reflect[s] core beliefs of society.” This system “is rooted deeply in the principle of religious freedom, a value at the very core of the American constitutional order.” This principle of religious freedom is regarded the first freedom in the American constitutional order because of its priority among constitutional values and its placement at the beginning of some bills of rights.
Constitutions in the United States have protected religious freedom since the time of the nation’s founding. State constitutions recognize the right (even the inalienable, natural right) to worship God according to the dictates of conscience, require government to ensure that all people are secure in that right, and prohibit government interference with that right. State constitutions prohibit any human authority or law that controls the free exercise and enjoyment of religious opinions or interferes with the rights of conscience. Likewise, state constitutions prohibit government compelling any individual to attend, erect, or support any place of worship, or to maintain any ministry against that person’s consent. The First Amendment also prohibits any “law respecting an establishment of religion, or prohibiting the free exercise thereof.”
The constitutional protection of religious freedom extends beyond individuals to associations and organizations that people of faith come together to form. In and through religious institutions, people worship God, instruct the faithful, shape the religious and moral beliefs of children, train ministers, and send missionaries to proclaim the gospel. Likewise, in and through these institutions, people pursue shared purposes, constitute communities of meaning, build social stability, strengthen social institutions, promote freedom, and meet their neighbors’ needs. State constitutions and the First Amendment clearly recognize this institutional dimension of religion, for they speak of places of worship, modes of worship, ministries, religious societies, sects, denominations, religious and theological institutions, and establishments of religion.
Because government in exercising its taxing authority would wield coercive power to control, suppress behavior, take property, and even destroy, a decision to tax religious institutions would conflict with constitutional protections, including the requirement to secure the right to worship and the prohibition against government interference with and control of the right to worship, the rights of conscience, and the free exercise and enjoyment of religious opinions.
9. A System of Exemptions from Taxation for Religious Institutions Protects Against Government Entanglement with Religion.
Although religious institutions contribute benefits to their communities, tax exemptions for these institutions are not justified on a belief that they contribute some value or some good to society, as is the case with other exempt organizations. Rather, with religious institutions, tax exemptions are justified on the belief that exemptions are a means of protecting religious liberty, maintaining a policy of neutrality, and reducing potential entanglement in religious affairs. Thus, they help to keep government within constitutional limits by shielding against government involvement in defining religion and religious matters, regulating religious conduct, and probing the affairs of religious organizations.
Four decades ago, Chief Justice Burger, speaking for the Supreme Court, expressed this understanding when he observed that tax exemption “creates only a minimal and remote involvement between church and state and far less than taxation of churches. It restricts the fiscal relationship between church and state, and tends to complement and reinforce the desired separation insulating each from the other.” Accordingly, exempting religious institutions does not establish religion. Rather, exemptions accommodate religion and “spar[e] the exercise of religion from the burden of property taxation levied on private profit institutions.” Thus, exempting religious institutions from taxes keeps them free of the intrusive governmental and administrative involvement that taxation would bring (such as property valuation, tax liens, tax foreclosures, and other confrontations), thereby safeguarding “the autonomy and freedom of religious bodies.”
10. Many State Constitutions Make Specific Provision for Tax Exemptions for Religious Institutions.
Many state constitutions include provisions specifically addressing tax exemption. For instance, the Kentucky Bill of Rights safeguards liberty by recognizing equality, prohibiting exclusive privileges, and prohibiting government from exempting property from taxation except as specifically provided in the state constitution. The constitution then exempts from taxation the following: “real property owned and occupied by, and personal property both tangible and intangible owned by, institutions of religion.” The California Constitution exempts from property taxation “[b]uildings, land on which they are situated, and equipment used exclusively for religious worship.” The New York Constitution states that “[e]xemptions from taxation may be granted only by general laws” and that “[e]xemptions may be altered or repealed except those exempting real or personal property used exclusively for religious, education or charitable purposes as defined by law and owned by any corporation or association organized or conducted exclusively for one or more of such purposes and not operating for profit.” The framers of such provisions protected religious liberty by providing for tax exemptions in their states’ fundamental laws.
For all of these reasons, tax exemptions should be retained for religious institutions. Tax exemptions preserve fundamental constitutional values and prevent government intrusion into matters beyond its proper scope of authority and influence. Tax exemptions immunize religious institutions from the controlling influence of government and shelter them from the destructive force of taxation. Because of the detrimental effect government regulation (including tax regulation) can have on religious organizations, tax exemptions are necessary to protect religious liberty and avoid government entanglement with religion. Furthermore, retaining tax exemptions for religious institutions is a win for everyone in American society. Everyone wins when the nonprofit sector, which includes religious organizations, is robust and capable of serving people in communities across the country, and tax exemptions help to preserve the financial viability of that sector.
 Part 2 of this essay focuses on the religious freedom concerns raised by the prospect of government taxing religious institutions. It should be noted that other freedoms are also implicated, including speech and association.
 Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564, 585 (1997) (observing that a “nonprofit entity is ordinarily understood to differ from a for-profit corporation principally because it ‘is barred from distributing its net earnings, if any, to individuals who exercise control over it, such as members, officers, directors, or trustees’”) (quoting Henry B. Hansmann, The Role of Nonprofit Enterprise, 89 Yale L.J. 835, 838 (1980)).
 26 U.S.C. § 501(c)(3).
 Bruce R. Hopkins, The Law of Tax-Exempt Organizations 5 (11th ed. 2016).
 With tax-exempt bonds, the interest paid to bondholders is not includable in gross income for federal income tax purposes. 26 U.S.C. § 145. Thus, issuing tax-exempt bonds, such as municipal or governmental bonds, provides an effective means of tax-exempt financing for the furtherance of governmental and other qualified purposes.
 Under the Internal Revenue Code, donors contributing gifts to § 501(c)(3) organizations, with the exception of public safety testing organizations, may deduct certain percentages of their gifts from their federal income taxes. 26 U.S.C. § 170.
 Henry B. Hansmann, The Rationale for Exempting Nonprofit Organizations from Corporate Income Taxation, 91 Yale L.J. 54, 72 (1981) (stating that “the exemption serves to compensate for difficulties that nonprofits have in raising capital” and that “such a capital subsidy can promote efficiency when employed in those industries in which nonprofit firms serve consumers better than their for-profit counterparts”).
 Id. at 66–71 (analyzing the view that tax exemption is a subsidization of services). One expert on the law of tax-exempt and nonprofit organizations has criticized the application of the subsidy theory:
While this “subsidy” is accurate terminology from the standpoint of the pure economics of the matter, it misconstrues and distorts the larger (and far more important) political philosophical rationalization for tax exemption for nonprofit organizations. The policy underlying this tax exemption simply reflects the nature of the way U.S. society is structured. Inasmuch as it is not the government’s money to begin with, the governmental sector and those who fund it should not be seen as “subsidizing” the nonprofit sector.
Hopkins, supra, at 17.
 The subsidy theory relies on at least two related assumptions that are questionable. First, it assumes that some amount of a religious organization’s money is the government’s to begin with. Second, it assumes that “not taxing” a religious organization is equivalent to “subsidizing” it.
 Walz v. Tax Comm’n of City of New York, 397 U.S. 664, 691 (1970). In a 1980 ruling, however, the Court seemingly embraced the subsidy theory as to a nonreligious, nonprofit organization when it explained that “both tax exemptions and tax-deductibility are a form of subsidy that is administered through the tax system. A tax exemption has much the same effect as a cash grant to the organization of the amount of tax it would have to pay on its income. Deductible contributions are similar to cash grants of the amount of a portion of the individual’s contributions.” Regan v. Taxation with Representation, 461 U.S. 540, 544 (1983). In his dissenting opinion in Walz, Justice William O. Douglas reflected a similar understanding when he wrote:
Tax exemption, no matter what its form, is essentially a government grant or subsidy. Such grants would seem to be justified only if the purpose for which they were made is one for which the legislative body would be equally willing to make a direct appropriation from public funds equal to the amount of the exemption.
Walz, 397 U.S. at 709 (Douglas, J., dissenting) (quoting The Brookings Institution, Report on a Survey of Administration in Iowa: The Revenue System 33 (1933)).
 See Boris I. Bittker & George K. Rahdert, The Exemption of Nonprofit Organizations from Federal Income Taxation, 85 Yale L.J. 299, 307-14 (1976). “Income” in this context is to be distinguished from unrelated business income (i.e., income from a trade or business that is regularly carried on but that is not substantially related to the charitable, educational, or other purpose that is the basis of the organization’s exemption), which may be subject to taxation (i.e, the unrelated business income tax (UBIT)). See 26 U.S.C. §§ 511 to 513.
 McCulloch v. Maryland, 17 U.S. 316, 431 (1819).
 Id. at 426, 431.
 Murdock v. Pennsylvania, 319 U.S. 105, 112 (1943) (“The power to tax the exercise of a privilege is the power to control or suppress its enjoyment.”) (citing Magnano Co. v. Hamilton, 292 U.S. 40, 44, 45 (1934)); Sheldon D. Pollack, Tax Reform: The 1980’s in Perspective, 46 Tax L. Rev. 489, 496 (1991) (“The power to tax provides a ready, albeit crude, means of public control over private behavior through a combination of economic incentives and disincentives permitting the state to alter, and thereby shape and manipulate, social and economic activity.”).
 Walz, 397 U.S. at 672 (tax exemption reflects a policy judgment that certain organizations “should not be inhibited in their activities by property taxation or the hazard of loss of those properties for nonpayment of taxes”).
 Id. at 673.
 Harold J. Berman, Law and Revolution: The Formation of the Western Legal Tradition 10 (1983).
 The term “jurisdiction” is “the power to declare law” and to “exercise authority over all persons and things within its territory.” Black’s Law Dictionary 927 (9th ed. 2009).
 McCulloch, 17 U.S. at 429.
 U.S. Const. amend. I.
 Carl H. Esbeck, The Establishment Clause as a Structural Restraint on Governmental Power, 84 Iowa L. Rev. 1, 2, 3 (1998).
 Id. at 10-11.
 Hosanna-Tabor Evangelical Lutheran Church & Sch. v. Equal Emp’t Opportunity Comn’n, 132 S.Ct. 694 (2012).
 Id. at 704 (quoting Kedroff v. St. Nicholas Cathedral, 344 U.S. 94, 116 (1952) (discussing Watson v. Jones, 13 Wall. 679 (1872)).
 Edward McGlynn Gaffney, Jr., Exemption of Religious Organizations from Federal Taxation, in Religious Organizations in the United States: A Study of Identity, Liberty, and the Law 409, 411 (James A. Serritella ed., 2006).
 See Randall Balmer et al., First Freedom: The Fight for Religious Freedom (2012); Michael W. McConnell, Why Is Religious Liberty the “First Freedom”?, 21 Cardozo L. Rev. 1243, 1265 (2000). The Indiana Bill of Rights, for instance, begins with seven separate provisions protecting religious freedom, which follow immediately after a provision declaring the equality of all people, the inalienable rights to life, liberty, and property, the establishment of civil government on the authority of the people, and the right of the people to alter and reform their government. Ind. Const. art. 1, §§ 2-8. Likewise, in the First Amendment, the Establishment Clause and the Free Exercise Clause appear before the Free Speech, Free Press, and Assembly Clauses.
 See, e.g., Ind. Const. art. 1, § 2 (“All people shall be secured in the natural right to worship ALMIGHTY GOD, according to the dictates of their own consciences.”); Kan. Const. art. I, § 7 (“The right to worship God according to the dictates of conscience shall never be infringed.”); N.C. Const. art. I, § 13 (“All persons have a natural and inalienable right to worship Almighty God according to the dictates of their own consciences.”); N.J. Const. art. I, § 3 (“No person shall be deprived of the inestimable privilege of worshipping Almighty God in a manner agreeable to the dictates of his own conscience.”); Penn. Const. art. I, § 3 (“All men have a natural and indefeasible right to worship Almighty God according to the dictates of their own consciences.”).
 See, e.g., Col. Const. art. II, § 4 (“The free exercise and enjoyment of religious profession and worship, without discrimination, shall forever hereafter be guaranteed.” ); Ind. Const. art. 1, § 3 (“No law shall, in any case whatever, control the free exercise and enjoyment of religious opinions, or interfere with the rights of conscience.”); N.C. Const. art. I, § 13 (“no human authority shall, in any case whatever, control or interfere with the rights of conscience.”); N.Y. Const. art. I, § 3 (“The free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed in this state to all humankind.”); Penn. Const. art. I, § 3 (“no human authority can, in any case whatever, control or interfere with the rights of conscience, and no preference shall ever be given by law to any religious establishments or modes of worship”).
 See, e.g., Col. Const. art. II, § 4 (“No person shall be required to attend or support any ministry or place of worship, religious sect or denomination against his consent.”); Ind. Const. art. 1, § 4 (“no person shall be compelled to attend, erect, or support, any place of worship, or to maintain any ministry, against his consent.”); N.J. Const. art. I, § 3 (No person shall “under any pretense whatever be compelled to attend any place of worship contrary to his faith and judgment; nor shall any person be obliged to pay tithes, taxes, or other rates for building or repairing any church or churches, place or places of worship, or for the maintenance of any minister or ministry, contrary to what he believes to be right or has deliberately and voluntarily engaged to perform.”); Pa. Const. art. I, § 3 (“no man can of right be compelled to attend, erect or support any place of worship, or to maintain any ministry against his consent.”).
 See, e.g., U.S. Const. amend. I.
 See, e.g., Ind. Const. art. 1, § 4 (“No preference shall be given, by law, to any creed, religious society, or mode of worship; and no person shall be compelled to attend, erect, or support, any place of worship, or to maintain any ministry, against his consent.”); Ind. Const. art. 1, § 6 (“No money shall be drawn from the treasury, for the benefit of any religious or theological institution.”); N.J. Const. art. I, § 3 (“nor shall any person be obliged to pay tithes, taxes, or other rates for building or repairing any church or churches, place or places of worship, or for the maintenance of any minister or ministry, contrary to what he believes to be right or has deliberately and voluntarily engaged to perform”); N.J. Const. art. I, § 4 (“There shall be no establishment of one religious sect in preference to another.”); Pa. Const. art. I, § 3 (“no man can of right be compelled to attend, erect or support any place of worship, or to maintain any ministry against his consent; . . . no preference shall ever be given by law to any religious establishments or modes of worship.”); Va. Const. art. I, § 16 (“No man shall be compelled to frequent or support any religious worship, place, or ministry whatsoever . . . . And the General Assembly shall not . . . confer any peculiar privileges or advantages on any sect or denomination, or pass any law requiring or authorizing any religious society . . . to levy on themselves or others, any tax for the erection or repair of any house of public worship, or for the support of any church or ministry . . . .”).
 Walz, 397 U.S. at 674. See also Part 1.
 Walz, 397 U.S. at 674.
 Id. at 676.
 Id. at 672, 674.
 Ky. Const. § 3.
 Ky. Const. § 170.
 Cal. Const. art. XIII, § 3(f).
 N.Y. Const. art. XVI, § 1.