Mark “Marty” Rathbun is the only former Scientology executive involved in the Church of Scientology’s 1993 tax exemption process who has publicly written about behind the scene details. These details are contained in Rathbun’s excellent third book Memoirs of a Scientology Warrior. In this work, Rathbun recounts the extensive and lengthy examination process conducted by the IRS. This book provides an excellent overview of Scientology’s legal battles in the 1980’s and 1990’s and is on my recommended reading list for any serious Scientology watcher.
The IRS examination process ended with the IRS granting the Church of Scientology International (CSI) and its related entities 501(c)3 tax exemption in a secret closing agreement that shocked many people. Until and unless both the Church of Scientology and the IRS agree to make public the details, Rathbun’s account — and it accords with what is available in the public record to date — remains the authoritative account. I will quote from portions of Rathbun’s account in this series.
The Benefits of Tax Exemption for the Church of Scientology
My opinion is that the Church of Scientology fought for tax exemption in the 1980’s for several reasons, but primarily as a way to erect a structural barrier to protect its business model of obtaining sustainable and endless excessive profits from the sale of its proprietary goods and services to a captive customer base. Writing about the bankruptcy of the Monitor Group in a 2012 article for Forbes, Steve Denning asked a dynamite question that equally applies to the Church of Scientology:
“Why go through the hassle of actually designing and making better products and services, and offering steadily more value to customers and society, when the firm could simply position its business so that structural barriers ensured endless above-average profits?” — Steve Denning in Forbes
In addition to its numerous self-serving internal policies that generate lavish profits — items such as mandated sec checks, six month OT sec checks, IAS donations, and the continuous reissues of old products that customers are ordered to purchase multiples of — 501(c)3 status gave the Church of Scientology a government-approved monopoly with significant competitive advantages. In other words, tax-exemption guaranteed the Church a sustainable competitive advantage that it would not possess if it were rightly classed as a business. For instance, tax exemption allowed the Church to Fair Game its competitors and critics and while calling such atrocious conduct “religious.” The Church has used terror and vigilanteeism in lieu of trademark enforcement and lawsuits in certain instances. Copyright lawsuits have been a mixed bag for the Church of Scientology, and perhaps most notably when it lost a ten year legal battle with Karin Spaink. In this case, Spaink successfully prevailed over the Church and now the OT levels are legally webbed online here.
The Church of Scientology is, in the final analysis, all about the money. Accordingly, tax exemption is crucial as it generates tax free profits for the Church while allowing it to engage in outrageous conduct behind First Amendment protections. Absent such protections, certain Scientology forms of conduct, such as Fair Game, invasion of privacy, forced abortions, etc. would be civilly and criminally actionable.
My Position on the Church of Scientology
My position at the outset is therefore crystal clear: I do not consider the corporate “Church of Scientology” in its present form to be a religion in any meaningful sense of the word.
I consider the corporate Church of Scientology in its present form to be a fascist transnational capitalist organization masquerading as a religion. In this sense, I view the Church of Scientology as a deceptive organization that gained tax exemption, in part, by making certain dishonest and fraudulent representations to the IRS. The Church continues to maintain tax exemption by dishonesty and fraud, e.g. the Church’s deceptive claim that David Miscavige does not run the entire Scientology Enterprise. This is a deceptus visus.
I consider that there are two parts to the Church of Scientology:
1. The part you see.
2. The part you do not see.
In this series — and on this blog — I am generally focusing upon the part of the Church of Scientology you do not see and the Church does not want you to see.
A History of the Church of Scientology and Tax Exemption
In 2009, a poster called Probity wrote an excellent summary of Scientology and tax exemption on xenu.net. I post here in its entirety and will add details in later installments. Note: That I am reposting Probity’s comments here does not mean that this writer agrees with any of my opinions concerning Scientology and tax exemption.