Start by removing their tax exemption status.
They don’t pay taxes to the city of Rome either, despite using our services and infrastructures: they use Rome’s sewage system but don’t pay for it, they use Rome’s garbage collection system but don’t pay for it - we are talking about private homes, not just churches. They don’t pay for the police service, streets maintenance and so on. The Vatican is s literal parasite of the city of Rome and the Italian nation as a whole. They are not an independent state, they depend on us for everything, hence they should pay taxes for the social services they use.
These are just humble men of God. Where would they possibly get the money to pay for such things?
When the Church is dismantled, who gets Vatican City? What would be a fun choice?
Well, Vatican city was already an Italian possession after the unification. The fascist regime gave it back to the papal state in exchange for the Church supporting Mussolini and fascism (Patti lateranensi).
Seriously, fuck the taxes. I mean, fine, tax them where you can, but that is BY FAR the least of the worries. Churches in the US are tax exempt because they are organized as non-profits and charities. You either have to change those tax laws or audit the shit out of each of them, neither of which is a quick or easy solution. 
There’s two things I think can be done given the political will/public pressure. First, do not let institutions do like the catholic church does and let an individual diocese declare bankruptcy after losing a suit. The catholic church is a holistic organization and the entirety of the church should bear the blame for what it’s representatives did. Use the income of the entire church to determine damages, and make the church responsible for paying them. Seize assets if it declares itself unable to pay. Same with the mormons and any other religious institution.
Second, send bishops and other administrators to jail for criminal conspiracy if they knew of an incident and covered it up. Set mandatory reporting requirements that disregard religious ideologies like the “seal of confession.” Treat it like the criminal conspiracy it is. In the US you can bring in the feds because they moved criminals between states to escape justice.
This is why I left the Catholic Church and became a wizard with unimaginable powers of alchemy and healing.
After the decades of one child sexual abuse case after the other coming out and time and again finding out higher ups in the church knew about this but just kept hiding it, are we really at all surprised? That level of corruption originates from the top down, not bottom up.
It will not surprise me to find out that one day they bust a Vatican City meth lab. Once you already got helping Nazis and child rape and tax evasion you might as well throw in meth production.
Does anyone know why the Vatican State exists? The answer is, because of a pact with Mussolini to support his regime in exchange for a state and the involvement of the church in education.
Sp, who’s really surprised?
I learned about that in a Trevor Moore song https://www.youtube.com/watch?v=6TxjrHPHypA
Wasn’t it created by Charlemagne The Great to support his rule as the “Holy” Roman Emperor?
That’s the papal state, not Vatican city. The papal state ruled over central Italy for centuries until it lost most of its territories leading up to the unification of Italy in 1861. Then lost Rome in 1870 and ceased to exist. The Pope retreated to the Vatican where he assumed the position of “prisoner in the Vatican” while the Italian government tolerated for the most part the Pope ruling over the basilica and its territories.
The modern Vatican State is a new entity created by Mussolini and Pius XI in 1929 with the Patti Lateranensi. With the creation of this state Mussolini gained the approval from the church, which was extremely important to solidify its grip over Italy, while the Church abandoned all claims from the former papal state.
Prior to 1870, Italy was several kingdoms, republics and duchies, with a federation of papal states in the middle, and Vatican, then just another cathedral hill in Rome, was not special – the pope mostly lived elsewhere. During the unification of Italy, the pope retreated to Vatican and troops left the palace alone. For almost 60 years, the papal state, now only controlling the Vatican area, was informally tolerated by Italy until Mussolini signed a 1929 treaty, recognizing the territory was independent.
To be honest, I’m not sure what the pope could do if he no longer came to good terms with the fascists but if I were him, I would retreat to an Allied cathedral on a “diplomatic mission” and ring the alarm, not caring if the tiny Vatican was occupied to Italy. Its bad wartime performance was becoming apparent and there would be a chance of reclaiming Vatican after it lost the war.