Wisconsin Supreme Court rules against tax exemption for Catholic Charities Bureau

(OSV News) -- The Catholic Charities Bureau of the Diocese of Superior, Wisconsin, is not exempt from paying into the state's unemployment insurance system because its operations aren't primarily religious under the statute, the state's Supreme Court found March 14.

The group plans to appeal the ruling to the U.S. Supreme Court.

The 4-3 decision raises the threshold for religious groups to prove their charitable organizations qualify for such an exemption under state law. The court's ruling, along its ideological lines, found that while the mission of the Catholic Charities Bureau and its subsidiaries are inspired by Catholic teachings, its actual work is "primarily charitable and secular" under state statute.

"In other words, they offer services that would be the same regardless of the motivation of the provider, a strong indication that the sub-entities do not 'operate primarily for religious purposes,'" Justice Ann Walsh Bradley wrote in the majority opinion.

Bradley wrote that asserting "a religious motivation behind their work" is "not enough to receive the exemption" under the statute's language. Bradley's ruling also said Catholic Charities Bureau and its sub-entities "have not identified how the payment of unemployment tax prevents them from fulfilling any religious function or engaging in any religious activities." She wrote that current U.S. Supreme Court precedent holds "the decrease in the money available for religious or charitable activities that comes with paying a generally applicable tax is not a constitutionally significant burden."

In her dissent, Justice Rebecca Grassl Bradley said the majority's "conclusion that Catholic Charities' activities are not religious because their activities are charitable is unsupportable. In this case, there is no daylight between religious activities and charitable activities."

Eric Rassbach, vice president and senior counsel at Becket, a religious liberty law firm representing Catholic Charities Bureau and its subentities, said in a statement, "The Wisconsin Supreme Court got this case dead wrong."

"CCB is religious, whether Wisconsin recognizes that fact or not," Rassbach said. The group indicated it will appeal to the U.S. Supreme Court.

The Catholic Charities Bureau and its subsidiaries previously asked the state Supreme Court to affirm it is "operated primarily for religious purposes" and can be granted a religious exemption from the state's unemployment insurance program.

Wisconsin law states religious employers in the Badger State are eligible for an exemption from its unemployment benefit program if they operate primarily for religious purposes. The state argued, however, that Catholic Charities Bureau does not meet that standard.

Catholic Charities Bureau is seeking an exemption so that it can participate in an alternate program, the Church Unemployment Pay Program, established by the Wisconsin bishops in 1986, according to its court filings. They argued the church's program provides the same level of benefits to unemployed individuals as the state's system but calls their program "more efficient."

The Freedom From Religion Foundation praised the ruling in a statement.

"This decision protects Wisconsin workers and resolves vast claims by the religious groups that they must be exempt from laws that apply to nearly all employers," FFRF Co-President Annie Laurie Gaylor said.

Several state Catholic conferences filed friend-of-the-court briefs in the case, with religious groups from other denominations also weighing in, including the American Islamic Congress, The Church of Jesus Christ of Latter-day Saints, the International Society for Krishna Consciousness, the Sikh Coalition, and the Jewish Coalition for Religious Liberty.

Catholic Charities Bureau's mission statement says it aims "to carry on the redeeming work of our Lord by reflecting gospel values and the moral teaching of the Church" and "to meet the critical needs and issues of our society through the use of our gifts and resources by mobilizing the Christian community in partnership with private and public enterprise."

- - - Kate Scanlon is a national reporter for OSV News covering Washington. Follow her on X (formerly Twitter) @kgscanlon.