The Demand Curve for Religion

(Photo: Jeremy Vandel)

“Render unto Caesar what is Caesar’s”? In many European countries, religion comes at a price: If you want the services of a religious community — for marriages, burial, and other activities — you pay a tax.  (In Germany, for example, there is an 8 percent surcharge on your income tax bill.) A very nice Finnish study by Teemu Lyytikäinen and Torsten Santavirta, “The Effect of Church Tax on Church Membership” (Journal of Population Economics, forthcoming), uses this institution to examine the demand curve for religion. The price elasticity of demand is fairly small—not more than 0.05—but that is partly because until 2003, Finland made it difficult to opt out of a religious community (and opt out of paying the tax).  Not surprisingly, once the transactions costs of tax avoidance were reduced, the elasticity of demand appears to have risen.

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  1. Nik says:

    German tithe is between 8 & 9.5% of the income tax taken.

    Ie for every 1000 euro paid in tax an e tra 80 is taken for the church . Jews have to pay aswell as christians.

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    • James says:

      How about agnostics, atheists, Budhists, pagans, and the rest of us?

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      • Dave Brown says:

        If ” agnostics, atheists, Budhists, pagans, and the rest” wish to pay an 8 percent surcharge on any income tax bill, there is the flexibility to contribute additional post tax income which the government would employ to fill its mandate.

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    • ab says:

      To opt out its just a mark in the income statement. So as long as you do not belong to any church you do not need to pay.

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  2. Jaq says:

    Interesting.

    I suppose regular church-goers would pay the tax every year, and non-religious people would opt out and stay out.

    Those who only go to church for weddings and funerals could save tax by opting out in any year where they don’t need either service. If it’s a hassle to opt out (or back in) it makes sense to wait until the end of the year to opt out, just in case they change their minds and can leave things as they are.

    How would they catch religious tax dodgers? Would they fine them, or excommunicate them?

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    • Olli M says:

      “How would they catch religious tax dodgers?”

      In Finland at least they are not even trying to do that. Even though a large majority of the people belong to the church, very few actually participate in any way – I think it’s an average of less than 1 visit per person per year (I don’t remember where I saw that, so may be false).

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  3. Me says:

    Hidden due to low comment rating. Click here to see.

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    • Pdubble says:

      It’s not about the US government, so it’s pretty neutral.

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    • Enter your name... says:

      Europe has the same 20% of adults actually showing up for church services on Sunday morning as the USA. The only difference is that the USA has another 20% who lie about it to pollsters. We *say* that 40% of us went to church last weekend, but only 20% of us actually *did*. In Europe, 20% say they went to church, and 20% actually did.

      You might also think about that “mission field”: Who restricts abortion more? Europe. Who discourages the death penalty? Europe. Who feeds the hungry better? Europe. Whose schoolchildren can always get medical and dental care? Europe. What the religiously oriented people wish for in the USA, the Europeans already have.

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      • Anj says:

        Its not 20%, in Denmark, its closer to 5%, with 31% saying they think there is a god of some sort.

        Having said that, afaik, most people pay the church tax, because its handy for things like funerals, weddings etc, and its not noticeable in your pay packet.

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      • Bunny says:

        > Who feeds the hungry better? Europe. Whose schoolchildren can always get medical and dental care? Europe. What the religiously oriented people wish for in the USA, the Europeans already have.

        Though rarely worded this way, the religious right want administrative control of welfare services for the hungry and sick – essentially they want less competition from government. In this sense what the religiously oriented in Europe wish for, those in the USA already have. See http://www.american.com/archive/2008/march-april-magazine-contents/a-nation-of-givers

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      • Enter your name... says:

        Bunny, I don’t think it’s fair to treat “the religious right” as being all religious people. There are a lot of religious people who want to feed the hungry, clothe the naked, and heal the sick, and are (sometimes with the exception of abortion rights and GLBT issues) politically liberal. In my experience, the people running the soup kitchens and independent food pantries (almost all of which are explicitly Christian organizations) would be happy to have more competition from the government, or even from independent non-religious or atheistic organizations.

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      • Bunny says:

        EYN, I didn’t mean to imply that the religious right represent all religious people. At most I meant to put forth the perspective that the religious are like any other group: broadly speaking the right seeks to preserve the in-group even at the expense of others while the left tends to cooperation even at the expense of self-sacrifice.

        Anthropomorphizing the group allows one to depict the group as schizophrenically split between warring desires. When I paraphrased your generalization I do not think my statement was any less accurate than yours.

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  4. Gav says:

    Hmm. Interesting, but a flaw in the research – they assume that people must derive some utility from the church as they delay until the end of the year before opting out. I would contest that there is no incentive at all to opt out earlier, and we’re all disorganised enough not to bother doing things until the last minute, hell, even for things that have a positive effect!

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  5. Kay says:

    I don’t know about Finland, but in Germany opting out is not as simple as ticking a box– once you are considered a member of one of the “official” religious communities (Catholic, Protestant/Lutheran, Jewish) you have to actually make an effort to go de-register. Not sure how easy it is to get back in when you want to have a wedding etc.

    However, there are several “free” (in both senses!) Christian groups that are not part of this system that survive on the donations of their members.

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  6. Mark says:

    So what do we think will happen if they jack up the tax rate on annulments or a persons #2 or #3 marriage. Who votes a) create a dis-incentive for failed marriages b) expand the tax revenue since people won’t change or c) get more people that opt out of religion entirely.

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  7. Victor of Xanten says:

    Old information, its nowadays quite easy to leave the church in Finland. And something many 18yo kids do. Or in my case as 32(?), i simply got fed up with a socalled christain church that wont promote or believe in jesus… only pushing islam, multiculture and tolerance. And all that other newfangled nonsense of homomarriage, women priests etc… DISGUSTING!

    And im something of a agnostic zen-jesus-buddhist :D

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