Catholic Group Gets Supreme Court Hearing on Tax Exemption Bid

The US Supreme Court will take up a new test of religious rights, agreeing to consider a bid by a charitable arm of the Catholic Church for an exemption from Wisconsin’s unemployment tax.

The justices will review a Wisconsin Supreme Court decision that said Catholic Charities of the Diocese of Superior didn’t qualify for a carve-out for religious organizations in the state’s unemployment compensation system.

The case could have a wide impact on state unemployment systems, which use taxes on employers to pay benefits to people out of work. Catholic Charities says 47 states have laws similar to Wisconsin’s. The group, which provides services to the poor and needy, says it wants to instead participate in the church’s own unemployment compensation system.

A ruling in favor of Catholic Charities potentially would let religiously affiliated hospitals and universities opt out of unemployment compensation systems as well.

Expansion of religious rights has been a theme for the Supreme Court under Chief Justice John Roberts, and the Wisconsin case may have special resonance. Seven justices — the six conservatives, plus liberal Justice Sonia Sotomayor — are either practicing Catholics or were educated in Catholic schools. Justice Brett Kavanaugh spoke during his 2018 confirmation hearing about his volunteer work serving meals at Catholic Charities in Washington.

Wisconsin law makes its exemption available only for organizations that are “operated primarily for religious purposes.” The Wisconsin Supreme Court said Catholic Charities didn’t meet that requirement because it serves and employs non-adherents, doesn’t attempt to imbue participants with the Catholic faith and provides services that could be offered by secular organizations.

Catholic Charities called the result “absurd.” The group said the ruling discriminates among religions in violation of the Constitution’s First Amendment.

The decision “wrongly disfavors those religious traditions that ask believers to care for the poor without strings attached,” Catholic Charities argued.

Wisconsin officials urged the Supreme Court not to hear the case, saying the state court reached the right result.

Catholic Charities “failed to show how ‘the payment of unemployment tax prevents them from fulfilling any religious function or engaging in any religious activities,’” Wisconsin Attorney General Joshua Kaul argued, quoting from the Wisconsin Supreme Court decision.

The court will hear arguments next year, probably in March or April, with a ruling likely by July. The case is Catholic Charities Bureau v. Wisconsin Labor & Industry Review Commission, 24-154.

To contact the reporter on this story:
Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editors responsible for this story:
Elizabeth Wasserman at ewasserman2@bloomberg.net

Steve Stroth

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