Wisconsin Continues Legal Battle Over Tax Exemptions for Catholic Charities

Despite a decisive 9-0 ruling against it, Wisconsin is still pursuing its effort to block tax exemptions for Catholic charities. The Supreme Court determined in June that the state’s refusal to grant a religious exemption from unemployment taxes to Catholic Charities, which is part of the Wisconsin High Diocese, breached the First Amendment.

Wisconsin’s Democratic Attorney General, Joshua Kaul, is asking the state Supreme Court to remove tax exemptions for all religious organizations. He points out that the court found the state acted unconstitutionally by selectively excluding certain religious nonprofits but did not specify how to address this violation.

In a recent brief, Kaul stated, “Discrimination is resolved by restoring equal treatment,” suggesting either extending the exemption to organizations like Catholic Charities or abolishing the exemption entirely.

This ruling reversed a prior decision by the Wisconsin Supreme Court, which had indicated that Catholic Charities did not meet the criteria for an exemption, claiming it “does not operate primarily for religious purposes.”

Eric Rassbach, Vice President of the Becket Fund for Religious Freedom, criticized Wisconsin’s continued legal pursuits despite the unanimous Supreme Court decision. He remarked, “Trying to climb out of a 9-0 loss is even more ridiculous. The country should get an L and move on.”

The state government now contends that upholding the exemption would lead to a different form of discrimination. In a statement, the Attorney General’s office mentioned that to comply with the Supreme Court’s decision, any exemption should apply to nonprofits motivated solely by religious beliefs—like certain hospitals—even if these entities don’t conduct overtly religious activities.

Currently, secular nonprofits performing the same services, such as non-religious hospitals, would still have to adhere to state regulations since their work lacks a religious basis.

Lawyers representing Catholic Charities argued that there is clear bias against religious institutions. They noted that the state only tried to eliminate its religious exemption system after losing in the Supreme Court, prompted by the inclusion of Catholic Charities.

In the June ruling, Justice Sonia Sotomayor emphasized that it’s crucial for the government to maintain religious neutrality. She pointed out that while enforcing this rule can be challenging, the discrimination issue doesn’t meet those stringent requirements. “When governments differentiate between religions based on theological differences in the provision of services,” she wrote, “they impose sectarian priorities that must meet the highest levels of judicial oversight.”