In a recent decision, the Supreme Court ruled on Catholic Charities v. Wisconsin Labor and Industry Review Commission, finding that a Wisconsin rule limiting tax exemptions to religious charities engaged in proselytization or serving only their co-religionists violated the First Amendment. The decision focused on the Establishment Clause’s prohibition of denominational discrimination. The Court stated that because the Wisconsin law “differentiates between religions along theological lines,” it constitutes “textbook” discrimination and fails to meet strict scrutiny.
However, the Supreme Court did not address what defines religion itself. The Wisconsin Supreme Court had interpreted a provision requiring exempt charities to be “operated primarily for religious reasons.” While attempting to clarify “religious reasons,” the state court drew a restrictive line. The Supreme Court did not offer an alternative interpretation but noted that the state court’s reading was incompatible with the First Amendment.
The ruling emphasized that some religions tie charitable work to proselytization while others do not, and thus any rule treating them differently is inherently a denominational preference. This distinction is made between clearly religious groups rather than between religious and secular entities.
The Court avoided setting a precedent for defining religious practice, acknowledging potential future challenges but stating this case was clear-cut due to reliance on recognized religious bodies’ beliefs. Future cases may present harder questions if laws favor widely recognized religious bodies while burdening smaller or lesser-known groups.
Lower courts will continue addressing these issues as claims arise from groups seeking unusual religious exemptions from general laws. Questions remain about whether subjective sincere beliefs qualify as religion under the First Amendment or if definitions should focus on core functions like worship and ethics. Catholic Charities leans towards recognizing sincere differences as evidence of theological distinctions by states.
The impact of Catholic Charities is already evident in Roman Catholic Diocese of Albany v. Harris, where New York has similar rules allowing exemptions only for groups serving or employing primarily co-religionists. This case raised questions under the Free Exercise Clause about neutrality and general applicability following the 1990 Smith decision. On June 16, the Supreme Court granted certiorari, vacated the lower decision, and remanded it for reconsideration in light of Catholic Charities, signaling that both clauses require denominational neutrality.
