The U.S. Supreme Court will hear arguments on Monday to decide whether Catholic-affiliated charitable organizations in Wisconsin must pay unemployment taxes for their employees. These groups, operating under the Catholic Charities Bureau (CCB) of the Diocese of Superior, argue that taxation violates their constitutional rights under the First Amendment's free exercise clause.
In March 2024, the Wisconsin Supreme Court upheld a decision by the state's Labor and Industry Review Commission (LIRC), stating that these groups are "not operated primarily for religious purposes" under Wisconsin's Unemployment Compensation Act and therefore do not qualify for tax exemptions. This ruling has significant implications for religious organizations nationwide.
The affected groups, which include services for the disabled, elderly, and people living in poverty, emphasize their broad mission. According to the Becket Fund for Religious Liberty, which represents the Catholic Charities Bureau, these organizations assist individuals regardless of faith, aligning with their broader mission to serve humanity. The Becket Fund stated, "Catholic Charities will ask the Justices to protect its freedom to participate in Church programs."
Wisconsin’s unemployment system aims to provide a safety net for residents who lose their jobs. While federal and other state programs offer religious exemptions, Wisconsin's law specifies exemptions only for "established plans" deemed eligible by the LIRC. Notably, the law does not explicitly mention religion, sparking debates about its interpretation.
This case raises broader questions about the balance between religious freedom and state laws. Catholic Charities, though affiliated with the Church, operates programs that serve diverse communities, a point used against exemption eligibility. Opponents argue that tax relief for such groups could create loopholes, undermining funding for unemployment benefits.
The outcome of this case could set an important precedent for how religious organizations interact with state and federal tax policies. Stay tuned as the Supreme Court deliberates the complexities of this issue.
