The high costs of the German ‘church tax’

By Phil Lawler ( bio - articles - email ) | Jul 24, 2026

The Archdiocese of Munich/Freising received approximately €630 million ($718 million) from German taxpayers last year.

Stunning, isn’t it? Imagine what an American diocese could do with that amount of revenue. Take, just for example, the Archdiocese of New York, which includes roughly 50% more Catholics than the Archdiocese of Munich. If the US government provided the same level of funding, the New York archdiocese would receive more than $1 billion a year from Uncle Sam.

Think how many parishes could be refurbished (rather than closed or “reorganized”) with that money. How many parochial schools could be opened, how many Catholic hospital wards equipped, how many new charitable programs launched!

But of course those are the wrong questions to ask. The right question is a simple one: How many souls would be solved? And the answer—the salvific effect attributable to the increased funding—would be zero.

The comparison between the level of funding in the two archdioceses is flawed, in any case, because New York and Munich operate on radically different revenue models. The New York archdiocese receives its income in the form of freewill donations, coming either directly from the faithful or from others who admire the work of the Catholic Church. The gifts received are voluntary, prompted by charitable impulses. In Munich, and throughout Germany, the contributions to the church show up on tax bills.

The German tax system includes an unusual provision for religious bodies, the Kirchensteuer or church tax. Citizens who are registered members of any recognized religious group pay a tax surcharge, which the government passes along to the designated church. Under this system the German dioceses have become phenomenally wealthy, even as the pastoral practices of the German Church leadership has prompted a massive exodus from the pews. Last year the Kirchensteuer produced more than $7.5 billion for German Catholic dioceses, despite the fact that over 300,000 people formally renounced their Catholic identity.

In Munich, that €630 in tax revenue actually represented a substantial (€15 million) decline from the previous year’s income. As the archdiocese continues to shrink, along with most of the other German dioceses, that downward trend will no doubt continue.

The Kirchensteuer requires only a small extra tax payment: less than 10% of an individual’s tax bill, as opposed to a traditional tithe, which would demand 10% of one’s overall (pre-tax) income. But Germans are already heavily taxed, and this system creates three perverse incentives for potential donors:

1. Lapsed or inactive Catholics—who constitute the clear majority among those officially registered on the church rolls—can save money by removing their names. People who are uncertain about their faith, and may need spiritual help to stay afloat now have a reason to break away from the Church.
2. Active Catholics may feel, after paying their tax bills, that they “gave at the office,” and need not contribute to the weekly collections.
3. Moreover Catholics of ordinary means might conclude, with good reason, that their contributions to the Church would make no difference, rendered unnecessary by the massive infusions from the government.

The system also creates perverse incentives for Church leaders and unintended (one hopes!) consequences for diocesan policy. The dioceses, flush with cash, can do whatever they want with the revenue, provided only that they do not run afoul of government policies. They can set up counseling centers, but those centers must adhere to government policies prohibit discouragement of homosexual acts. They can administer medical clinics, but the clinics will be expected to make provisions for patients seeking abortion or euthanasia. German Catholic institutions are constantly tempted to make their peace with immoral government policies, and the German bishops, in the current liberal climate, regularly succumb to those temptations.

All the while, the German diocese looks ever more comparable to a secular charitable agency. The bishops find themselves presiding over an enormous bureaucracy, acting as employers and managers rather than shepherds of souls. And it shows.

Perhaps worst of all, since there is such an extensive network of charitable institutions formally affiliated with the Church, there is little support available for new initiatives, funded entirely by freewill donations, guided by a distinctively Catholic vision of charity. In the ecclesiastical version of Gresham’s Law, the nominally Catholic agencies drive out the more authentic charitable ventures.

There is a simple solution. German Catholics should demand the abolition of the Kirchensteuer. If that is politically impossible, the German dioceses should renounce the income, save their faithful from the tax surcharge, and pass the hat.

For years my parents worshipped at a parish that hosted a weekly Bingo game. The church was located at a busy intersection, and had a large parking lot; the game drew huge crowds and became phenomenally successful. So successful, in fact, that the parish was racking up eye-popping annual budget surpluses. Active parishioners stopped contributing to the weekly collections, realizing that the parish had no financial needs.

Finally a wise pastor recognized that the wealth of the parish had given rise to a serious spiritual problem: the faithful had lost their spirit of charity. He closed down the Bingo nights, and decreed that the parish would support itself, for richer or for poorer, on the donations of its members. His decision drew an angry reaction from local residents—but only mild surprise from parishioners, who had accounted for only a small fraction of the regular Bingo players. Donations to the weekly collections increased immediately. The parish is still thriving, supported by the people who want to support it.