A federal district judge has already ruled that the cash housing allowance paid to ministers is unconstitutional (the HA that includes a parsonage is a separate section of the tax code and was not challenged). This is the case brough by the Freedom From Religion Foundation. The case is on appeal with the Seventh Circuit Court of Appeals and some law profs have weighed in on the matter, on the side of the FFRF.
Those who want to read the law prof’s lugubrious amicus can go find it. A little bird told me that not a single one of the tens of thousands of SBC clergy want to spend time with that, so I suggest that a good treatment of the prof’s material is by my CPA tax blogging friend, Peter Reilly: Law Professors Argue that Housing Tax Break for Ministers is Unconstitutional. Or, just stick with me for the Executive SBC Clergy Abstract and have more time for golf on your several days off each week.
What I have found in the collegial discussion with my fellow SBC clergy is that they (a) see their work as unique and their humble, owned domicile is an essential part of their job as a pastor, and (b) really like their tax break and will snarl and snap at anyone who tries to take it away.
With regard to the latter, I’m with my colleagues. It’s a nice tax break. I’d like to keep it and, in the best SBC tradition of alliterative sermonizing, I’ll snarl, snap, and scream to keep it.
In regard to our deserving the HA because of unique job and home situation, neither I nor the law profs are all that impressed with the argument. The prof’s write:
As a factual matter, claims that ministers are unique are significantly overstated. Not all ministers use their homes for work, are on call, need to live near work, or are subject to being moved by their superiors. Moreover, many lay employees work out of their homes, are on call, need to live near work, and are subject to being transferred. For instance, doctors, police and other emergency responders are subject to being called out and often must live near work. Corporate employees are often transferred from office to office, often to more expensive locations. Yet no one claims that these employees should get tax-free housing. Moreover, many ministers who receive the exemption do the exact same jobs as secular taxpayers and indeed for the same employers. Taxing ministers differently violates the core value of horizontal equity, under which similarly compensated taxpayers should be taxed the same.
One might remember that the HA has been liberally applied to “clergy” who are teachers, administrative non-church folks, and even assistant sports coaches. I use the scare quotes because I look askance at ordination for the purpose of getting a tax break from gummit. Clergy indeed.
The law profs didn’t miss the stink of the whole thing,
Third, Section 107(2) is not an appropriate accommodation for religion because it (1) disregards important differences in ministerial income that warrant different tax treatment
Thus, the enterprising megacelebrity pastor who buys the Biltmore House can if he has enough income exclude all the costs associated with that from income tax just like Preacher Bobby who gets (some weeks) 100 bucks from his church and lives in a singlewide trailer on a quarter-acre lot carved out of a soybean field in eastern Arkansas. Dr. Diamond Cufflinks avoids tens of thousands in taxes he can then spend on his Bombadier Global 7000. Brother Bobby avoids a couple of thou as the most. The pungency in this cannot be missed.
But, take heart brethren. They have their law profs. We have our law profs. I’m guessing that the housing allowance will survive, though as bad tax policy for the gummit, but is not an establishment of religion. Let’s just be humble about it and not snarl at those who dislike it.
Then again, some prominent SBC voices have advised that ministers should make preparations to do without the tax break.
I’m going for a record…two entire articles in a row without a comment. Oops, messed that up.
One of the problems this would cause for pastors/churches (if the law was struck down) has to do with the ACA (Obamacare). Housing allowance is not included as income, which is advantageous in terms of the subsidies a pastor may receive for medical insurance.
I’d be in favor of losing the HA if I could drop self-employed status.
I would have taken that deal prior to retirement in a heartbeat. All churches would then be faced with paying FICA taxes. The HA and SECA tax aren’t related except one keeps money in the minister’s pocket and the other takes it out.
I’m against the housing allowance, as there are already laws on the book for people using their homes in their business, and deducting expenses associated with such usage from your taxes..
Mostly I am against it in light of the practice of “Double Dipping” … deducting interest payments on mortgages, when the payments were made with untaxed moneys. I’ve always considered that to be immoral.
William Thronton,
This is all your fault. Had you not written so many post on the HA over the last several years, the government would never have known anything about it and never taken it to court.
Let’s start the Blame William Society.
The gummit already sees all and knows all. I think Phil Driscoll and the mega-mansion-megapastors got the IRS attention years ago on this. I’m just doing my part to keep it stirred up.
The idea that the housing allowance is unconstitutional is absurd. It’s classic judicial overreach. Is it bad tax policy? Perhaps. But if you think so, appeal to the legislature to remove it. The judiciary should mind their own business and stay out of the business of legislating from the bench.
The FFRF plaintiffs would be happy to see the laws repealed. Absent that, they raise serious constitutional issues over the IRS denying them the HA given to clergy, nonprofits, and lots of others. While I’m not persuaded, one federal judge was. We’ll see. I prophesy a victory that will preserve our Sacred Tax Break.
My proposal for lay leadership is the “Make our pastor whole” movement where congregations pledge to raise money to give rev a raise if the housing allowance is struck. In some ways the HA is a subsidy to congregations (which those supporting it use as an argument in its favor, which actually goes the other way from an establishment view)
Personally I am very disappointed that liberal denominations like my own UUA are joining with the Christian Dominionists in making America theocratic again
I’d guess that most SBC congregations would attempt to do this although some very weak churches may find it difficult or impossible.
I have yet to be on a church staff that offers an allowance to anyone other than the Senior Minister – even when everyone else on the ministry team is ordained. I realize that is largely the product of being serving smaller congregations, but it’s not as if every ordained minister is somehow taking advantage of the tax break. Do Chaplains, for example, claim a HA? I never did.
There’s no reason for any staff minister not to take the HA and maximize it. I’d question the ethics of an ordination just for the HA. GuideStone answers all the questions here. Military chaplains operate under the military HA rules, I suppose, but if they have outside clergy income I’d guess that they could set some of that up as HA, not sure. Other chaplains have to meet the same req as church clergy.