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By that logic, charities should not be tax exempt either. I agree that charity isn't the ideal solution to poverty, hunger, homelessness, etc. and we should be funding social welfare to solve those problems, but in the meantime people who are working to alleviate these issues should not be tax burdened. I don't like the religious exemption, but the 501(c)(3) exemption as a whole is a good thing.
There's an argument to be made that charities and other 501c3 organizations both entrench capitalism and normalize its failures to care for marginalized people, and/or that they also mostly exist to provide the wealthy with tax breaks through which they can fund pet projects, bypassing any democratic processes and ignoring what society actually needs.
I agree, but I still think that as long as charities exist they should be tax exempt. I look at it similarly to USAID, which was a way for the US empire to project soft power, but also saved and improved lives. Ending 501c3 tax exempt status would be a disaster in the same way that the current administration ending USAID was. Don't throw the baby out with the bathwater.
Ending it suddenly without a replacement would be a catastrophe, no doubt about it. That doesn't mean they deserve tax exempt status. The majority of charities are pretty decent and get a good portion of their donations to people in need but there are also charities that are basically a way for the wealthy to avoid taxes. I think the government will better represent the will of the people (in normal times), have lower overhead, work faster, and close the loopholes. I'd also be satisfied with closing the loopholes that allow people to take advantage and avoid paying taxes. Donating a few million to the charity you own to get a tax break, while your nephew runs the charity taking a fat check, and makes the area you live nicer; improving your real estate values should not be a thing.