Wis. Supreme Court rules Catholic Charities Bureau must pay unemployment taxes

Listen to this article

A divided Wisconsin Supreme Court ruled Thursday that a Catholic charitable organization is not covered by an exemption allowing religious organizations to avoid paying Wisconsin’s unemployment tax because its on-the-ground operations are not primarily religious.

The court ruled 4-3 that the Superior-based Catholic Charities Bureau and its sub-entities’ motivation to help older, disabled and low-income people stems from Catholic teachings but that its actual work is secular.

“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 for the majority.

Eric Rassbach, vice president and senior counsel for the Becket Fund for Religious Liberty, which represented Catholic Charities, said his client “plans to appeal this decision to the U.S. Supreme Court to protect Catholic Charities’ good deeds.

“The Wisconsin Supreme Court got this case dead wrong. Catholic Charities is religious, whether Wisconsin recognizes that fact or not.”

The case’s outcome increases pressure for all religions to show their charity arms deserve tax exemptions in Wisconsin. Every Catholic diocese in Wisconsin has a Catholic Charities entity that provides a wide range of services to people in need regardless of their religious affiliation.

Wisconsin law requires businesses and organizations to pay an unemployment tax that is used to fund benefits for workers who lose their jobs. The law exempts religious organizations from the tax.

Five years ago, the Catholic Charities Bureau in Superior and four of its sub-entries filed a lawsuit that the religious exemption from the unemployment tax should apply to them since they are motivated by Catholic teachings that call for helping others.

During oral arguments last fall, attorney Jeffrey Shampo, who represented the Wisconsin Labor and Industry Review, said while the Catholic Charities Bureau is run by the diocese, federal tax forms and websites from its various nonprofits do not mention religious activity, according to court documents.

The case drew attention nationally from religious groups, many of whom filed briefs in the case, including Catholic Conferences in Illinois, Iowa, Michigan and Minnesota, 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.

Along with Bradley, three other justices upheld the lower court’s decision: Rebecca Dallet, Jill Karofsky and Janet Protasiewicz. The court’s three conservative members — Rebecca Bradley, Brian Hagedorn and Annette Ziegler — voted against.

Bradley began her dissent quoting a Bible verse calling for rendering unto God the things that are God’s. She wrote the Court’s majority was rewriting exemption statutes and “rendering unto the state that which the law says belongs to the church.”

In February, a state appeals court ruled the four sub-entities did not show their activities were religiously motivated. Judge Lisa Stark said their mission statements state all people will be served regardless of their religion. She further wrote that the bureau has a religious motivation to help others through the subentities, it is not involved in any religious activities.

Bradley cited the same rationale in the court’s majority opinion.

“The record demonstrates that CCB and the sub-entities, which are organized as separate corporations apart from the church itself, neither attempt to imbue program participants with the Catholic faith nor supply any religious materials to program participants or employees,” she wrote.

The Associated Press contributed to this report.