Please Pacify the Plodder!

(This piece is in response to the piece that was just posted a few minutes ago, a re-post of William Thornton’s SBC Plodder article concerning the housing allowance. Comments are open on this post as a place of discussion for both sites. Here is that article.)

Can someone please print a copy of SBC Plodder, wrap some fish in it, and send it to our friend William Thornton? In the imagery of The Godfather, this is how one signifies that someone dangerous to the mafia, such as Luca Brasi, now “sleeps with the fishes.” Someone needs to send William a message, and fast.

William is a talented blogger. Although I happen to disagree with him on a variety of denominational matters, I actually find his work in tracking Cooperative Program giving trends enlightening. He certainly does not put the spin on the situation that one sometimes feels is offered by denominational leaders. He is frank and forthright, qualities I normally appreciate in the writing of journalists and bloggers.

But now he needs to stick a sock in it.

Thornton raises thorny questions about the legal exclusion of taxable income by ministers through the Clergy Housing Allowance. His argument has been picked up and even advanced by Forbes magazine. He recently joked that only eight people read his blog, but if one of the eight writes for Forbes we may very well attract the attention of the rest of the secular media.

William, my brother, your articles on this subject are nothing less than friendly fire.

I am the first to admit that the Housing Allowance, like many other aspects of the tax code, harkens from an earlier era in American life in which clergy received such a break in light of their value to society and a wage scale that often meant being paid in the chickens and garden vegetables of one’s church members.

Granted, things have changed today. However, most ministers, myself included, have come to rely on this Housing Allowance, as it probably saves most clergymen a few thousand dollars each year in income taxes.

William, the people opposing the Housing Allowance are atheist organizations, such as the Freedom From Religion Foundation. Brother, most ministers are overeducated for their income level. They sacrifice to embrace a calling that is more important to them than financial gain. They work long hours for limited pay. Their dual tax status requires them to pay for Social Security through SECA at a rate of 15.3% rather than FICA at 7.65%. In all of this, there is at least one significant tax break provided in the United States tax code. Why do you want to consider eliminating it?

William, in one of our earlier exchanges, you mentioned we might get together for coffee sometime. I would enjoy that. But if you keep writing about this topic in the same manner, I will be more than happy to allow you to pick up the tab.

Comments

  1. says

    How about a sliding scale or phase out like other exemptions? I mean, a pastor making $60,000 a year, give or take, I have no problem with them having a housing allowance. Someone like Ed Young has no business having any of his income exempted from tax. He’s a freaking millionaire for cying out loud.

    • Bruce H. says

      I live in Houston. A friend of a friend who knows a friend of a member of 2nd Baptist was telling one of my friends how the housing allowance worked for Ed Young. Apparently, the church paid cash for the house Ed chose when he accepted the call. I’m sure he had a limit to spend. Each year, up to 20 years, he would receive 5% ownership of the house. I think he has been there over 20 years now and is entitled to ownership of the house.

      I liked the way they did it because the pastor was able to choose his own house with his wife and was not given an allowance. That would seem to be an incentive to stay where you are unless God spoke audibly for him to leave. If churches would get their finances together they could do the same thing.

  2. John says

    Or as they say back home, ‘Don’t gore my ox.’ It is always better to cut military retirement benefits if you are not retired military, or cut Medicare if you aren’t relying on Medicare, or cut social security benefits if you’re not on social security. We want the system to change, just not my system.

  3. says

    I love my avuncular Alabama colleague because he has learned that a sense of humor goes a long way in the Southern Baptist pastorate, but sometimes wonder about about his reading comprehension. Not to worry, I will magnanimously grant some grace here because of the state in which he makes his domicile and takes his sacred clergy gummit tax break.

    Let’s be clear on this: I am not in favor of eliminating the clergy housing allowance.

    …more later, unless I have to leave my computer to fend off the angry mob outside my home.

  4. says

    However, most ministers, myself included, have come to rely on this Housing Allowance, as it probably saves most clergymen a few thousand dollars each year in income taxes.

    I think this is going to be the winning argument… for clergymen. ;-)

  5. Frank L. says

    The average pastor has a Master’s degree with many having over 20 years in service (or more). They make less than a first year teacher.

    They have very few if any benefits.

    Please don’t lump us in with Young.

    As for Thornton. I hope he enjoys his 15 minutes of fame.

    • says

      Fifteen minutes of flame, maybe?

      And whether any of us like it or not we ARE already lumped with Phil Driscoll, the Copelands et al, who pour hundreds of thousands into their HA. It might be helpful to read what I have written and the links if you are really interested.

      • Frank L. says

        Out of fairness, I will read the links (if they are not too long and convoluted) and then give you my opinion.

        I was not commenting on your links.

    • says

      That’s not what I was thinking. I meant to use Young as an example of the minority of pastors who are millionaires and therefore don’t deserve the tax break as opposed to most of the people who comment here that are in the ministry who probably make less that $75,000 a year.

  6. says

    It’s a tricky issue. I don’t know of any good, substantial legal argument for why pastors should be granted exceptions that others do not receive. True, we are often paid less and receive fewer benefits (all certainly true for myself) but that in itself is no justification for treating one group different from others. What are we saying – let’s increase the tax burden on others because we are not paid as much as they are? And Democrats rejoice that we finally agree with them. :)

    Still, I appreciate my housing allowance and the relief it brings to us, but I’d be hard pressed to raise a solid argument defending it if it were challenged.

    • Frank L. says

      Let’s see if I follow your argument: you believe the tax exemption is wrong and unjustly puts a burden on others, but since it benefits you personally, you are going to continue accepting it.

      What kind of morality is that?

      Just for those who speak without any understanding of the tax code: a minister is a completely different entity in the tax code. We don’t cause others to be “over-taxed” by getting a housing allowance. In fact, the housing allowance, for myself, does not come close to off-setting the additional self-employment tax I pay.

      Ministers, as far as I have been able to discover, are the only category of workers in the U.S. that are considered both employed for income tax purposes and self-employed for social security purposes.

      And, the opt out for social security is not a “minister’s option” but a religious option.

      I personally do not see anything morally wrong in accepting the housing allowance while paying a self-employment penalty. If I felt it were morally wrong, I simply would not take it.

      One is not obligated to take the deduction.

    • Bill Mac says

      I’m with Chris here. No one should pay taxes that they aren’t obligated to pay. But it is difficult to come up with a good justification for the exemption.

    • says

      The historical justification, as I understand it (and as mentioned in the original posts) was society expressing its appreciation and support for the work of those in ministry, doing so by easing some of the financial pressure on ministers. I think this is still worthwhile, should society continue to feel that way. The problem for the church is that a growing number in society do not feel that way. That’s bad news for pastors, but it’s not particularly unfair. The nation gave us a gift through relief in the tax laws, the nation can take that gift away.

  7. Jon says

    I’m a little depressed that no Baptist ever remembers to use that great Baptist goal of limiting unnecessary entanglement between church and state. If Congress ever gets serious about cutting deductions in the tax code, general “charity” deductions will be on the chopping block; we need to remember that churches are different than other charities.

    The better argument, it seems to me, is that Churches are different, and that Congress can carve out special exemptions from regulation or tax in an effort to avoid entanglement with religious beliefs under the First Amendment. It can’t establish religion, but it could reasonably decide to steer clear on religious grounds.

    The hypothetical pastor should at least add, “Back in a gentler time, Congress wisely decided that it wasn’t going to interfere too much in the way that churches decide to pay their ministers. That’s why ministers can opt out of Social Security, too, unlike most people. Here, the IRS says the church can provide housing, or pay certain housing expenses for the minister, so that the church’s actual ministry expenses aren’t taxed away.”

    • Rick Patrick says

      Nice argument, Jon.

      Succinct, clear, logical…and financially in my own best interests.

      If you ever want to have coffee, I’ll take the money I save when William buys mine and I’ll be happy to buy yours.

    • says

      “Here, the IRS says the church can provide housing, or pay certain housing expenses for the minister, so that the church’s actual ministry expenses aren’t taxed away.”

      There is no issue with a church providing housing and requiring the minister to live in it. No religious question there.

      But I don’t think the IRS decided to forego income taxes on the minister so that they could help churches.

      Sometimes a tax break is just a tax break. They don’t have to make sense.

      • Jon says

        “I’m sure it doesn’t make sense” is a much worse explanation than “I don’t know.” “It doesn’t make sense” allows us to assume the worst about the original action. Religious exemptions from tax have a far greater basis.

        I don’t know how much of the history is driven by the “poor parsonage” model, as much as the “Monsignor” model. If a wealthy person dies and leaves a mansion to the church, and the bishop moves in, it’s crazy to make the church treat use of the mansion as taxable “income.”

        It’s also crazy to make the church pay tax on the expenses related to the mansion. Does it make sense to exempt church toilet paper from sales tax, but require the bishop to pay income tax on the money used for toilet paper at the bishop’s official residence?

        The next step is the one that says maybe the Bishop has to have _a_ house, but not necessarily _this_ house. Or maybe the closest house to the grounds isn’t for sale, but for rent. So the bishop picks the house, and the church pays him the rent and the toilet paper money.

        So, while I’m sorry to say it, pastors, the hidden assumption isn’t “let’s give pastors a break.” It’s the assumption that a Pastor’s house is turned over to ministry much like a church building, and it frustrates the religious purposes of the members if we tax their gifts differently based on the nature of the facility.

        • Jon says

          And just to close the loop, then:

          It is, then, an unnecessary entanglement with religious practices to try to determine whether and how much of a Pastor’s housing expense is a ministry expense of the church. We don’t make the church substantiate the amount of “real ministry” at the parsonage; the Government assumes it all is, to avoid fighting about what counts for ministry at the pastor’s house.

          There is a problem when Churches allow HA abuse, or follow abusive leaders. And it seems some pastors’ houses aren’t being used for enough ministry for my taste. But so long as members are being told the truth, I’d rather have churches make that decision than the government.

  8. Christiane says

    perhaps the tax ‘break’ is a courtesy in the same way that there are certain government breaks for those who serve in the military . . .

    clergymen are seen by most Americans as servants of the public in a special context . . . and as such are accorded a certain measure of public respect by most people.

    people understand and honor the reserved parking places at hospitals for clergy, and I think that a ‘tax break’ for any honorable public servant is something that most Americans see as appropriate and within the realm of what is right and good in our society. (unlike many, I fail to see the American public as so filled with evil as some see them, mostly because I CANNOT see them in that light as it is not in my nature)

    People do care about those who serve, in all the various capacities in our country. Clergy, as a part of those who render service to those in need, are a respected group in American society on the whole. The tax ‘break’ may, in fact, be a kind of ‘thank you’ from a grateful nation.

    • Peter Reilly says

      Actually you more or less have nailed it. The in-kind exclusion goes back to 1921, but the exclusion for cash allowances was put in effect in the 1950s and the limited legislative history talks about the importance of ministers in the fight against Communism

  9. Frank L. says

    Well, I read his blog post and it did not take long to see the straw man fishing for red herrings.

    One quote: “””And your wife works and has an income.”””

    Typical of the abuse that pastors face in regard to financial issues. Why should a pastor’s wife’s income have anything to do with his financial support from the church?

    I’ll now give my opinion: “I hope Thornton enjoys his 15 minutes of fame” and any potential harm it may cause to those doing their best to serve the Lord.

    • says

      You didn’t read much, Frank, because you miss so many points.

      A two income clergy family where the husband/senior pastor has the average SBC salary (including housing allowance) of $57k and a wife who is a teacher or nurse is easily over six figures in income, probably a good bit over if retirement and insurance benefits are added. No straw man or woman there. The HA is most often justified on the basis of “we poor clergy.” Check the average salary for various occupations and clergy will not make the top couple of hundred.

      Let that pastor explain to your congregation, or the average Joe on the street, why he needs or gets a tax break on his housing. I know a good many self-employed people who pay SECA. None live in caves. All have a home. None receive a tax break.

      I like our tax break. I am not embarrassed and do not apologize for taking it all these years. I could not justify it on the basis of my being an ordained minister who served churches for three decades. It’s just a tax break.

      …but skewer the messenger if you wish. I’m still a Baptist pastor (semi-ret.) and am used to it.

      • says

        William,

        While there remain those of us who earn less than the average and live in single-income homes. This still does not justify a tax break, but the reality still exists. :) I would love $57k but we make what we make, and we’ve decided for my wife to stay home and raise our five kids. We struggle but we get by. If the tax break were taken away, we would struggle a bit more but I believe we would still get by.

  10. Donald R. Holmes says

    “Well, I read his blog post and it did not take long to see the straw man fishing for red herrings.

    One quote: “””And your wife works and has an income.””””

    My wife works at home (5 kids, homeschool, hospitality, etc…) AND works in my ministry AND receives NO income.

  11. Donald R. Holmes says

    BTW, figure into this that half of SBC Pastors are bi-vocational (which means parrt-time pay for a full-time job) and the number look less “nice”.

    • says

      I gave the figure for senior pastors, full time. Bi-vo pastors earn on average about $20k in addition to their regular vocation.

      And, honestly, I’m not trying to pick fights with anyone here just giving the data. We are several generations into two income families. There is no question that the HA benefits many lower paid clergy, something I have stated a number of times.

  12. Bruce H. says

    I don’t know how it is in the ministry. I understand how I feel about my wife and children as a layperson because I want my children to have what others have. I just think it is different when God calls a man as a pastor. Missionaries go to the field with little or no income and their children never receive the same privileges as pastor’s in the US. I do not think a pastor should be poor nor do I think they should have great wealth. This is an area I struggle with. It even sounds odd when the education of a pastor is compared with a worldly education and pay.

    I led music in a church of 250 + for 7 years and gave a tithe along with special offerings. I drove 45 minutes one way, never missed a service on Sunday or Wednesday and never thought anything about being paid. I told a friend about my service one time and he was surprised that I never received a dime for what I did. I thought that odd, too.

  13. Frank L. says

    Figures don’t lie but liars will figure.

    As we throw around statistics try comparing a 30 year pastor with a 30 year teacher. It will give a different picture than average salaries.

    Trying to imply that pastors are paid in any commensurate way would be laughable if it were not so offensive.

    I’m totally happy with how God has provided but I will not shy from defending the honor and integrity of the vast majority of the brethren

    After 30 years my brother in law retired from public service. His retirement is nearly twice my salary for 35 years of service.

    I’ve never heard him complain about my housing allowance.

    Also. My pay package is set by a team of accountants all of which make significantly more than I do. One makes in an annual bonus five times my salary.

    So. I have never had to justify my housing allowance to them or anyone else–not in 35 years of ministry.

    After all. What price does one put on the love and counsel of a beloved pastor.

    I detest the implication of this post.

    • says

      Then take time to read the actual words and stop making implications.

      There is a point to be made (I already have an article on it) about clergy pay – something beside the old saw about how poorly paid we are.

      • Frank L. says

        William,

        I’ll simply state my case and then bow out of this unprofitable conversation.

        Your statistical analysis is skewed. Your harping that the defending the housing allowance is predicated on an “old saw about how poorly we are paid” is both false and offensive.

        Accept for some who clog on blogs, the pastors I know personally are, in fact, grossly underpaid but seldom if ever play the “old saw you apparently play.” Every pastor I have known over the last 35 years has labored tirelessly, sacrificially and has not “increased the tax burden of others” by taking the housing allowance.

        There is so much wrong factually and philosophically with your post that it would take considerable time to address it point by point.

        Somehow, I feel that would be a huge waste of time and would only play into your fifteen minutes. I will not be doing that. If you really wanted to address the matter statistically and factually, I feel you could have done that–but choose to take a different approach.

        It would be useless to debate this with you and fruitless for the Kingdom of God.

        You and I differ significantly in regard to this matter, and I’ll leave it at that before I say something I would regret later.

        You do not have to answer to me, and I would not want you to do so.

        Feel free to take a parting shot. I’m done with the issue.

  14. says

    I admit to writing with what I hope is a little elan, a heavy dose of humor, and supplementing that with the usual ministerial drama – we all do that on Sunday mornings – but there are a few serious things here.

    1. There is an active constitutional challenge to the HA. You can bet that the ERLC, GuideStone, and SBC XComm in Nashville are paying attention…amici curiae to follow.

    2. The unlimited ceiling on the HA has offered some embarrassing examples of clergy mansions. Anyone who thinks this does not harm us all is blind.

    3. Christians ought to favor an ethical tax code, not just grab for the dollars like every other special interest group.

    4. Some churches ordain ministers in order for them to receive the HA (think of some pedestrian sounding church staff positions where the staffer is ordained). This hasn’t entered this discussion much but is an issue, and much more difficult to address.

    5. I’m just curious about how my brethren explain this to their congregations.

    My position is that the HA is one of many historic provisions of the tax code that should be kept. The revenue lost through it is not large and the beneficiaries are generally not so affluent as to trigger odium from the populace. The unlimited ceiling is a problem but one that appears to have a simple solution: cap it.

    But I hear you brethren:
    Well, you can do anything
    But lay off of my ministerial housing allowance.

  15. says

    I am Reverend Thornton’s friend at forbes.com. I write about this mainly from reading court cases. I have had guest posts from a retired IRS agent who is outraged about Pepperdine University’s basketball ministers, Andrew Seidel of FFRF, to whom I gave a bit of a hard time, and Rev. Thornton who defenced the allowance as a modest benefit.

    It would be nice if a couple of you would put your comments on forbes.com instead of preaching to the choir.

    Reverned Thornton and I were both kind of outraged at Phil Driscoll who was excluding 200k for his second home.

    • says

      Peter,

      I was an “auditor” for a few years and then spent a little over 20 years as an “appeals officer”. I was never an “agent”.

      For those who might be interested, you can find an example of my IRS work at (starting at the bottom of page 6):

      http://www.ustaxcourt.gov/InOpHistoric/Baumann.TCM.WPD.pdf

      I also encourage the folks here to “get out” a bit and offer some comments over at Forbes in response to your column(s); as well as my place where I have a light on for them at:

      http://groups.yahoo.com/group/Maury_and_Baty/message/28491

      Sincerely,
      Robert Baty

    • says

      Invite this rowdy crowd to your forbes blog? Brave man.

      The big difference between discussions there and here is that here almost everyone is a direct stakeholder for whom the HA is a modest but important tax savings.

      The newest SBCV article features Kenneth Copeland whose home was valued in 2008 at $6.2 million. His spokesman said to the WSJ that he was in compliance with all laws and IRS rules meaning that scads of his income is tax free on the same basis as the folks here.

      • Peter Reilly says

        I invited my minister to join the fray, but he declined. Actually I dropped out of the church a while ago but we still keep in touch. I got much of my practical training on parsonage as the most tax literate member of a congregation that went through quite a few ministers in a relatively short period.

  16. says

    If beverage alcohol were not legal, there might well be enough arguments against it to keep them from legalizing it.

    If tobacco were not legal, a good case could be made for not legalizing it.

    I learned a long time ago that there’s a huge difference between permitting something previously prohibited, and outlawing something previously permitted. I think that’s the case with the housing allowance tax break. We can make lots of good arguments for doing the same for certain public employees, for teachers, for non-profit employees, and we can argue all day about highly paid preachers getting the break when we don’t think they need it. But it’s the old “Rocking chair” action at best .. it’s something to do, but we always wind up where we started.

    Hey .. I taught Sunday school. Should I have gotten a deduction?

  17. says

    Y’all might give Thornton his 15 minutes amongst the Baptists, but this issue is reserved for insuring me my 15 minutes to the broader audience.

    Thornton suggested the Baptists might have some amici-in-waiting. Bring them on! The Pacific Justice Institute has already pledged to get involved, as it did in the earlier case, but has been rather silent.

    I am a theist (Church of Christ) and I support the FFRF IRC 107 Challenge.

    What ails IRC 107 could have been easily fixed had there been the will to do so; a long time ago. Then there was Rick Warren’s case and it didn’t happen then. Then there was the Grassley Commission and it didn’t happen then.

    Don’t whine about the “atheists” bringing the case!

    The theists had their chances and let them pass.

    Simply speaking, it doesn’t matter how “deserving” you think poor preachers might be. The law allows the benefit ONLY to “ministers” and that is enough to have it declared UNconstitutional; in my opinion.

    That’s why the “standing” issue has been so important. If “standing” is allowed, and it now has been, the Court can’t help but find the law UNconstitutional.

    Congress and the President could act like they did in Rick Warren’s case, and quickly cure what ails IRC 107, but it looks like they aren’t going to.

    What are y’all doing to get Romney and Obama to address this issue as part of their campaigns?

    And then there is Bush/Burleson deal that no one wants to talk about; the one that allows the “basketball ministers” and similarly situated employees at places like Pepperdine to claim the income tax free benefit.

    I guess Baptists have more private schools and similar businesses whose employees exploit the gimmick without having the need for a Bush/Burleson-like deal.

    Hooray for me! “Standing” has been allowed and I look forward to the Courts deciding the issue on the merits.

    It can’t happen too soon!

    Also, I’ve been patronizing the Baptists and others who have been chatting about this. How about having some Baptists requite my love and make their appearance on this issue at my place:

    http://groups.yahoo.com/group/Maury_and_Baty/

    See you there, or not!

    It’s my 15 minutes, and I plan to enjoy it!

    • says

      While I do not think a solid legal argument can be raised for why this exception should be perpetually continued for ministers, I do think it’s an exception that can be granted on the basis of the will of the people. In the past, the people wanted this exception because of appreciation for the work and office of the minister. I would like that appreciation to continue. One of the sad indictments of our nation is that people’s views of the church, and those who serve her, have plummeted. We’ve brought some of this on ourselves through various scandals and abuses, and some of it is due to the overall decline of the spiritual condition of the nation. Should the courts rule to strike down the exception, it would be a sad indictment for the nation, not because the nation has done something wrong or unfair to the ministers (it wouldn’t be wrong or unfair) but because the nation has become so pagan, has turned so far from Christianity, that she has no desire to help those who have done so much for so many on matters of far greater significance than education or healthcare or national security, etc.

      As for you being Church of Christ, I don’t suppose you mean United Church of Christ, one of the most pagan groups currently operating in America?

      • says

        Chris,

        I am looking forward to the Courts resolving our difference regarding the legal merits of the law.

        It can’t come too soon to please me.

        As with so many issues, folks can express their appreciation in many ways but, arguably, when they try to use the power of Government to do so (e.g., via IRC 107) they can run afoul of the Constitution.

        Ruling IRC 107 is UNconstitutional will not be such as you suggest, but that is a secondary/tertiary issue/consequence we might also fuss about; maybe when you make your appearance at my place as one here to requite my efforts here. No one else has showed up yet.

        No, it isn’t United Church of Christ. It is “Church of Christ” as might be commonly associated with Pepperdine, Harding, Alexander Campbell, etc., etc., etc.!

        Sincerely,
        Robert Baty

  18. Nate says

    First of all I’m shocked that nobody has mentioned that Social Security was not even available to clergy when it was first implemented. It wasn’t until some politician figured out they could hook the clergy in by saying they were thinking of them, but giving them the option of opting out. What has happened is that multiple generations think they are obligated to pay Self-Employment and get ripped off later in life, when they could be putting that money toward their retirement, which by the way, most churches don’t contribute a dime to their pastors, unlike companies that have 401K’s and matching contributions, etc.

    So the govt. gives pastors a housing allowance? Since most pastors really act like S-Corporations, it would be nice if we could take advantage of all the tax breaks that self-employed S-Corp guys do, but we can’t. To even insinuate that the Housing Allowance allows pastors to “rip-off” the govt. is insane.

  19. says

    Speaking of amici, the Pacific Justice Institute (PJI) remains curiously silent on the lastest case and developments regarding “standing”.

    Maybe they simply aren’t up to keeping their “vow” to again try to intervene to help the Government defend the statute.

    In the earlier case that was dismissed by mutual agreement of the Government and the FFRF, the PJI put up a Baptist preacher by the name of Michael Rodgers as its poster boy and claimed to have a 100 other anonymous preachers to go along with the intervention.

    Here’s a link to a story about Michael Rodgers’ part in the case:

    http://www.tulsaworld.com/news/article.aspx?subjectid=11&articleid=20100123_18_A11_TheRev918229&allcom=1

    Sincerely,
    Robert Baty

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