Solve the fiscal crisis by taxing the church?

Paul Caron calls attention to a WaPo article suggesting that some are considering the Roman Catholic Church -- you know, the one with all the fancy art and deep "coffers" (See Garnett & Carr, "Drop Coffers," in The Green Bag) -- as a source of funds in fiscal-cliff times. Putting aside the Post writer's silly reference to the Church as "one of the last untouched sources of wealth" (um, the Dissolution of the Monasteries, anyone?  Where does the writer think York Minster came from?), the piece raises some interesting questions.  Note that the article is not only about proposals to impose taxes on the Church's property, but also about proposals to end various subsidies (like school funding).  It strikes me that these different moves (i.e., imposing taxes and removing subsidies) raise different questions, but put that aside.

At First Things,  Leroy Huizinga has some thoughts about the story.  He writes:

. . . Why shouldn’t churches be taxed, in general? One reason has to do with preserving a healthy separation of Church and State. If Churches can be taxed, then the government can get into the business of running them (or crushing them) through tax policy, like it does most everything else. Another reason is that private institutions like churches contribute to the common good both as charitable institutions directly serving people through its various programs and also as space as a community mediating between individual and the State. A third reason is more practical: Churches generally do a better job administering social programs than government does (which, one suspects, grates government functionaries). A fourth reason applicable to Europe in particular: The reason most people bother visiting Europe and spending significant tourist dollars there is the legacy of beauty produced by Europe’s Christian heritage. . . .

Of course, one knows why government wishes to control religion, going back at least to Hobbes. Religious institutions have often been the only entities effective in challenging State power, reminding rulers that there is a higher law than their whims and will, that they too stand under the judgment of God and nature. . . .