Market Data 
By John Kruzel
WASHINGTON (Reuters) -The U.S. Supreme Court agreed on Friday to hear a bid by an arm of a Catholic diocese in Wisconsin for a religious exemption from the state’s unemployment insurance tax in a case with potential implications for constitutional religious rights.
The justices took up an appeal by the Catholic Charities Bureau, the social ministry arm of the Catholic diocese in the city of Superior, of a lower court’s decision rejecting its exemption bid. A Supreme Court ruling in favor of the bureau could require Wisconsin and states with similar tax programs to broaden their exemptions in order to comply the U.S. Constitution’s First Amendment religious protections.
The Supreme Court is expected to hear arguments in the case and rule by the end of June.
During the Great Depression, Wisconsin in 1932 became the first state to enact an unemployment compensation law, which operates by taxing employers and providing temporary payments to eligible unemployed people.
Three years later, Congress established a cooperative federal-state unemployment insurance program that would eventually lead to all U.S. states enacting their own plans.
Wisconsin is among 47 states that exempt certain religious entities – namely, those “operated primarily for religious purposes” – from having to pay into its unemployment insurance program, according to court records. The remaining three states use different eligibility criteria.
The Catholic Charities Bureau since 1917, it said on its website, has provided “services to the poor, the disadvantaged, the disabled, the elderly and children with special needs as an expression of the social ministry of the Catholic Church in the Diocese of Superior.”
Wisconsin state officials in 1972 determined that the group was subject to the state’s unemployment compensation law. But after a subsidiary of the Catholic Charities Bureau received a favorable court ruling in a similar case, the group and four of its other subsidiaries in 2016 sought religious exemptions from Wisconsin’s unemployment insurance tax.
Among the subsidiary groups involved in the latest case are organizations that provide services to people with disabilities including job placements and training, as well as daily living services and home visitation, according to court papers.
The Wisconsin Supreme Court in March 2024 ruled against the groups, determining that they were not “operated primarily for religious purposes,” and thus were ineligible for the tax exemption.
The state’s top court found that the bureau’s activities were “primarily charitable and secular,” noting that the group does not “attempt to imbue program participants with the Catholic faith” and that its services “are open to all participants regardless of religion.”
The ruling prompted the bureau and its subsidiaries to appeal to the Supreme Court.
They argued in their filing that the Wisconsin Supreme Court’s ruling violates the First Amendment “by favoring some religions over others, entangling courts in religious questions, and interfering with church autonomy.” They also argued that the state court erred by imposing too high a legal bar – proof beyond a reasonable doubt – for proving First Amendment claims.
