The tax deadline is upon us, and I wanted to take this opportunity to shed some light on a very controversial topic: the Amish and taxes.
There are several reasons why this topic is so controversial, and two that I would like to address. Taxes are charged by many levels of governments in order to carry out many different functions. Some of these functions include maintaining and building roads, public transportation, public works, enforcement of law, protection of property, welfare, education, etc. Whether or not you agree with these functions is another topic all together. However, several of these government functions benefit everyone—Amish included—even though the Amish may not actually contribute to these benefits financially. The most obvious example is the building and maintaining of roads. The cost of this is paid for mainly through gas taxes, revenue from driver’s licenses, and money collected through tolls. While the Amish do not pay these consumption taxes, they do use roads and bridges to drive their horse and buggies on.
The second reason why this topic is so controversial is because of the lack of information that has led to the assumption that the Amish do not pay any taxes at all. This is simply not true. There are taxes that are not paid by the Amish, but in each of these cases, it is because they either do not consume the service or product involved and so do not pay the excise/consumption tax, or they do not take advantage of the government benefit due to religious reasons, and therefore do not contribute towards its upkeep.
In order to receive any of the tax exemptions I am about to discuss below, an Amish person must formally join the Old Order Amish church. Amish join the church when they feel ready to do so, and in most cases this is in the late teen years. Once joining the church there is a form to be filled out that will make them eligible for certain tax exemptions.
The Amish pay income tax just like the rest of us Englishmen (that’s what they call Americans who are not Amish), and they also take any qualifying Child Tax Credits worth up to $1,000 per child. But let’s face it: most Amish families have upwards of 8+ children. How else can they run those large farms and family businesses? I remember one of our neighbors while I was growing up who had twelve children. When I naively implied that her family was huge, she blushed and said that she has had one new child every two years like clockwork since the beginning of her marriage. This definitely cuts down on their tax bill.
Since the Amish own a lot of land, they also pay a lot of property taxes and are liable for estate taxes as well. However, any property taxes paid do not benefit them because they have their own one-room schoolhouses where children are taught by devout, single Amish women until the 8th grade. They also own rather beautiful, typically large homes due to large families (whether or not the Amish pay for Home Insurance is an interesting topic for another article).
Payroll Tax Exemptions
The Amish do not collect unemployment, social security, or welfare benefits because doing so would be against their religious beliefs. As such, they have been exempt from paying into these systems. This is rooted in their religious belief to insure their kind (specifically the following Bible verse has been cited by the Amish to explain this: I Timothy 5:8 says “But if any provide not for his own, and especially for those of his own house, he hath denied the faith and is worse than an infidel.”). They also believe that insurance is an outward sign of a lack of faith in God. Instead of insurance, they collectively help one another pay medical bills, rebuild homes and farms, etc. When someone has a huge bill that they cannot cover, they stand up in their weekly church ceremony and tell everyone about it. No one leaves until enough money has been raised to cover this expense. In a sense this is insurance, but it is among themselves and does not involve an outside body. The Amish even have an exemption in the new Healthcare law—which mandates that everyone carry health insurance—for these same religious reasons.
Social Security is a form of insurance for old age and survivors, so they do not collect it, nor do they pay into it. This exemption was written into the 1965 Medicare Bill after a very interesting series of events you may wish to read about.
Consumption Taxes Not Paid—Gas and the ‘Sin’ Taxes
Your lifestyle dictates the consumption taxes that you pay. The same is true of the Amish, who have a much more restrictive lifestyle than most of us. Horse and buggies—the main mode of transportation for Amish—do not use gasoline. As such, the Amish do not pay gasoline taxes. The federal excise tax on fuel is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. State fuel taxes vary, but average 48.1 cents per gallon and diesel fuel taxes average 53.1 cents per gallon (this includes the federal fuel tax). Federal proceeds go into the United States Highway Trust Fund. State proceeds typically go towards roads and other transportation projects. Even though the Amish do not contribute towards these funds, their horseshoe-clad horses have been known to do some damage to the roads. It is interesting to note that certain counties in Indiana and Ohio, where there are a large and growing Amish population, require Amish buggies to get license plates.
A trek through Amish country in Lancaster PA will show the periodic barn with wooden slats opened to the air. These are tobacco barns that have been modified in order to air-cure tobacco leaves. While some Amish make money from selling tobacco, they do not purchase cigarettes because they are viewed as ‘worldly’ (that doesn’t mean they do not smoke cigars/pipes and use chewing tobacco, though smoking is forbidden in many Amish sects). This means that they do not pay taxes on cigarettes, but may pay taxes on other tobacco products. States use tobacco tax revenue in various ways, such as to fund health education programs, early childhood development, breast cancer research, education, etc.
Other ‘sin’ taxes not paid by the Amish are for alcohol or gambling winnings (this is probably not paid by most of us either!). The Amish do not consume alcohol. As such, they do not pay the alcohol tax. Federal alcohol tax is currently 21 cents on a bottle of wine, 33 cents on a six-pack of beer and $2.14 on a fifth of hard liquor. State alcohol taxes rates, which vary, generally go into a state’s general fund. And finding an Amish person in a casino would be like finding my grandmother in couture—it’s not going to happen.
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