The U.S. Supreme Court has agreed to review a case involving Catholic Charities in Wisconsin and its obligation to pay the state's unemployment tax. The case centers on a decision by the Wisconsin Supreme Court, which denied the organization an exemption based on its work not being "primarily religious" despite its Catholic foundations.
The court's review follows a ruling by Wisconsin's high court, which concluded Catholic Charities' activities are not sufficiently religious to qualify for an unemployment tax exemption, the Associated Press reported.
The issue comes down to whether the state can impose taxes on religiously affiliated organizations whose activities extend beyond direct religious services. Catholic Charities has long argued that its charitable work—serving both Catholics and non-Catholics alike—is fundamentally aligned with its religious mission and protected under the First Amendment.
Catholic Charities operates more than 60 programs across Wisconsin, including services for the elderly, disabled, and children with special needs, along with assistance for low-income families and disaster victims. While the organization's mission stems from Catholic teachings, its services are provided to individuals regardless of their religion.
Wisconsin law offers a tax exemption to church-controlled organizations that operate "primarily for religious purposes." However, the state Supreme Court ruled that the exemption applies only if both the motivations and the activities of the organization are religious. This decision has sparked controversy, as Catholic Charities maintains that its work, while not solely religious, is still in line with its Catholic mission.
The case has drawn significant attention, especially from religious organizations. In addition to Catholic Charities, multiple religious groups—ranging from Catholic to Islamic, Lutheran, Jewish, and Mormon faiths—have filed briefs supporting the charity’s position, arguing that the case represents undue government interference in religious practices. These groups claim that Wisconsin’s stance would set a dangerous precedent for religiously affiliated institutions across the country.
Eric Rassbach, the lead lawyer representing Catholic Charities, criticized the Wisconsin Supreme Court’s ruling, calling it "ridiculous and wrong" to penalize the charity for providing services to all, regardless of their faith. "Wisconsin is trying to make sure no good deed goes unpunished," Rassbach added, emphasizing that Catholic Charities' role in the community serves the public good.
On the other hand, Wisconsin Attorney General Joshua Kaul has argued that the state should not grant an exemption in this case. Kaul pointed out that a significant portion of Catholic Charities' funding comes from state and local government sources, including Medicaid, and that the charity's employees do not need to be Catholic to work there. Kaul further noted that Catholic Charities has been paying the unemployment tax since 1972, long before this legal dispute.
The Wisconsin Attorney General also stated that the services Catholic Charities offers do not involve religious training or orientation, making it harder to justify the exemption. He emphasized that the organization’s activities, although noble, do not qualify for religious status in the eyes of state law.
As the case heads to the U.S. Supreme Court, it is expected to be argued in the spring. Recent Supreme Court rulings have favored religious plaintiffs in disputes involving government interference with religious practices, and this case could further clarify the scope of religious exemptions under the First Amendment.
Religious scholars have echoed the sentiments of Catholic Charities' supporters, asserting that the case is about the government overstepping its bounds in regulating religious practices. They argue that the decision would undermine religious freedom protections and that the state should not interfere with organizations that are driven by faith-based missions, even if their services extend to non-religious populations.
The case also raises concerns from secular groups, particularly those like the Freedom from Religion Foundation, which argues that a ruling in favor of Catholic Charities could extend to other religiously affiliated institutions, such as hospitals and universities, and allow them to avoid paying unemployment taxes. This, they argue, could have wide-ranging implications for the state’s revenue system.
As the legal battle continues, Catholic Charities stands by its position that its charitable work is rooted in its religious mission, despite the varied religious backgrounds of those it serves. The charity remains committed to its mission of helping vulnerable populations, including the elderly, people with disabilities, and low-income families, through its programs in Wisconsin.
Legal observers are closely watching the case, as it may set an important precedent for the relationship between religion and government regulation. The U.S. Supreme Court's decision could have far-reaching implications for other faith-based organizations that are involved in social services but also receive government funding.
