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The Supreme Court this week unanimously sided with a Catholic charity in Wisconsin, saying the state improperly discriminated based on religion when it denied the group a tax exemption.
The justices reversed a decision from the Wisconsin Supreme Court that found Catholic Charities ineligible for the same tax exemption that the Catholic Church receives because the group's social services programs are not "operated primarily for religious purposes."
Justice Sonia Sotomayor said the state court's ruling violated the First Amendment by denying the exemption because the group does not proselytize or serve only Catholics through its charitable work.
"It is fundamental to our constitutional order that the government maintain 'neutrality between religion and religion,'" Sotomayor wrote in a decision that has implications for other religiously affiliated nonprofits. "… When the government distinguishes among religions based on theological differences in their provision of services, it imposes a denominational preference that must satisfy the highest level of judicial scrutiny."
The ruling could affect how other states and the federal government consider eligibility for similar tax exemptions for religiously connected organizations, including Catholic-affiliated hospitals that employ hundreds of thousands of health-care workers.
The case is one of three this term involving religious rights and testing whether and how the government must accommodate religious beliefs. The high court has moved in recent years to expand the role of religion in public life. But it deadlocked 4-4 last month, leaving in place an Oklahoma ruling that rejected a proposal for the nation's first religious public charter school.
An attorney for the Catholic-affiliated charities in Thursday's decision said "Wisconsin shouldn't have picked this fight in the first place."
"It was always absurd to claim that Catholic Charities wasn't religious because it helps everyone, no matter their religion," Eric Rassbach, senior counsel at the Becket Fund for Religious Liberty, said in a statement. "The Court resoundingly reaffirmed a fundamental truth of our constitutional order: the First Amendment protects all religious beliefs, not just those the government favors."
In practical terms, Rassbach said, the ruling means Catholic Charities is now entitled to the state tax exemption.
The office of Wisconsin Attorney General Josh Kaul (D) declined to comment.
Under Wisconsin law, most employers make regular contributions to the state's unemployment fund through payroll taxes. Organizations operating primarily for religious purposes are exempt from paying into the program, which provides benefits to laid-off workers.
Catholic Charities Bureau, which operates as the nonprofit charitable arm of a diocese of the Roman Catholic Church, provides community services to people with disabilities and mental health issues in Wisconsin. It had been contributing to the state unemployment tax system since the 1970s.
In 2016, the nonprofit asked for an exemption on behalf of four of its charitable programs. Wisconsin's top court said that although Catholic Charities is motivated by a religious mission to serve those in need, those activities could be done "by organizations of either religious or secular motivations, and the services provided would not differ in any sense."
The state court found that the group's activities are "secular in nature" because it does not "attempt to imbue program participants with the Catholic faith nor supply any religious materials to program participants or employees."
Catholic Charities appealed to the Supreme Court, saying the First Amendment prevents the state government from meddling in church decisions about how to structure its service entities - decisions it says are rooted in the church's teachings about charity. The nonprofit's attorneys, from the Becket Fund for Religious Liberty, told the justices that "showing Christ's love to the disabled, elderly, hungry and poor is a 'religious' activity.'" They argued that the group should not be penalized for helping all people - not just Catholics - without proselytizing.
The Trump administration, which also participated in the case, agreed that Catholic Charities should qualify for the exemption, telling the justices that the state court misinterpreted the relevant statute and warning that their ruling could affect federal law.
In its opinion Thursday, the Supreme Court said the Catholic charitable group was unfairly denied an exemption because the Catholic faith bars its followers from engaging in proselytization and limiting services to fellow Catholics.
The state's determination, the justices said, improperly "grants a denominational preference by explicitly differentiating between religions based on theological practices."
In a statement, attorney Ryan Gardner of First Liberty Institute, which litigates on behalf of religious rights, said the court made clear that "any attempt by the government to determine which religiously motivated actions are sufficiently religious enough to enjoy either constitutional protection or eligibility for a government benefit like tax exemption is 'obnoxious to the Constitution.'"