Kenneth C. Halcom (Cravath, Swaine & Moore, New York) has published Taxing God, 38 McGeorge L. Rev. 729 (2007). Here is the abstract:

From Locke to Leiter, philosophers have debated the proper governmental posture toward believers and groups of believers. The First Amendment to U.S. Constitution places significant limits on governmental coercion with respect to religious practices in America. Scholars have explored these limits in a wide variety of areas, but surprisingly few scholars have devoted much sustained thought to the Constitution intersection with governmental power in a most pervasive and intrusive form: taxation. This article fills this perceived hole in the literature.

This article analyzes the case law of the U.S. Supreme Court and extracts therefrom eight principles that limit the taxing power of the government, the most important, and likely the most controversial, of which is that a full-scale income tax may not be constitutionally imposed on religious organizations. The implications of these principles for current law are as follows: (1) the Internal Revenue Code as in effect today is entirely constitutional; (2) the section 501(c)(3) limitations on political and commercial activity are constitutional; (3) a typical property tax may be constitutionally imposed on religious organizations; and (4) the unrelated business income tax is constitutional.

This article has important theoretical and practical payoffs. On the theoretical side, this article helps to clarify the source of tax exemption for religious organizations by introducing and describing the distinction between statutory tax exemption and constitutional tax exemption for religious organizations. By making clear what exactly Congress has given and what exactly the Constitution has given, this distinction makes possible a richer and more nuanced theoretical picture of the tax exempt universe. On the practical side, this distinction clarifies the stakes of the debate regarding the proper contour of the Code’s exemption regime. At stake is not whether religious organizations be exempt from the federal income tax, but about whether donors to religious organizations may deduct contributions. This simple but significant shift of perspective should inform further academic and political debate at the intersection of tax and religion.