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.


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.


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

Dave Brown

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.



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?

Olli M

"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).


Yep and Europe is one of the worlds largest missions field. BTW this articles sounds very uneducated about religion and the US Government.


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


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!


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.


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.

Victor of Xanten

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