I think they should definitely pay taxes. Or at least ones that make a certain % more than their overhead costs, like land, electricity etc.
Edit: Because this was mostly me asking the flood, I decided to research it more.
This is the best info I have I found
http://churchesandtaxes.procon.org/
So my final conclusion is that if religious institutions were paying taxes it would cause a breach in the separation of church and state, and it would create a large conflict of interest. So at this juncture it seems things are better left as is.
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What happens if a religious institution can't or doesn't pay their taxes? Will it be seized by the government? In which case, I could see the potential for a lot of problems. What if those institutions are housing holy relics and other objects that religious people hold sacred? There would be outrage and possibly even violent social unrest. As an Orthodox Christian, I wouldn't like to see our pride and joy in America the Joy of All Who Sorrow in San Francisco be seized if we couldn't pay our taxes, and have the holy relics of St. John Maximovitch--one of our only American saints--be taken from us by the government. I think religious institutions should be tax exempt provided that they stay out of politics. But the ones that DO get involved in politics, tell their congregations how to vote, and secretly fund religious-right political organizations should pay taxes. It's a two way street.