July 30, 2014

Let’s Discuss: A Taxing Question

Methodist Episcopal Church and Parsonage, Iroquois, South Dakota 1900s 2.preview

UPDATE 2: Here is a good overview and guide to the clergy housing allowance.

UPDATE: Family Research Council President Tony Perkins said that this judgment is against the Constitution.

“We have seen many courts over the years attempt to banish God in various ways from the public square, but this case in particular reveals a level of supreme arrogance,” Perkins said in a statement. “Once again, Judge Crabb has neglected to consult the Constitution that she was sworn to uphold.”

Perkins went on to say that this is another example of “banishing God from the public square.”

* * *

On Friday, a federal judge ruled that the tax exemption which gives clergy the ability to write off housing expenses from their federal taxes is unconstitutional. According to a report from Religious News Service,

U.S. District Court Judge Barbara Crabb ruled on Friday (Nov. 22) in favor of the Freedom From Religion Foundation, saying the exemption violates the establishment clause because it “provides a benefit to religious persons and no one else, even though doing so is not necessary to alleviate a special burden on religious exercise.”

The housing allowances of pastors in Wisconsin, where the ruling was made, remain currently unaffected as the ruling has been stayed by the judge until appeals are exhausted.

The court’s ruling says that the tax exemption for housing violates the establishment cause because it grants a special privilege to clergy and thus amounts to preferential treatment for religion. It warns that such treatment could easily be turned on its head: “…if the government were free to grant discriminatory tax exemptions in favor of religion, then it would be free to impose discriminatory taxes against religion as well.”

The RNS article notes that Rick Warren of Saddleback Church was engaged in a dispute with the IRS for ten years over a charge that he owed back taxes related to his housing. Pastor Warren won the case, and rules for the clergy housing allowance were clarified as a result of the decision.

Though I am not now enjoying this tax exemption, I did for many years, and may one day qualify for it again. The way it works is this:

  • In advance, a church board can designate a portion of their ordained pastor’s salary as housing allowance.
  • “Housing” includes anything spent to provide, furnish and maintain a house. If the church furnishes a parsonage, then the fair rental value of the house is to be considered when calculating housing costs.
  • If the pastor makes $50,000, for example, and the board designates $20,000 of that to cover the minister’s housing expenses, then the pastor pays federal income taxes on $30,000 if he or she spends the full 20K on housing expenses. If $18,000 is spent, then the pastor would be responsible for paying taxes on $32,000.
  • The housing allowance portion of the minister’s salary is exempt from federal income taxes, but not from social security taxes (unless he or she has opted out of the program for religious reasons). So, when figuring his or her social security tax responsibility, it must be calculated on the entire $50,000.

The opinion of the court regarding this benefit was clearly stated:

Although it is undoubtedly true that taxes impose a burden on ministers, the same is true for all taxpayers. Defendants do not identify any reason why a requirement on ministers to pay taxes on a housing allowance is more burdensome for them than for the many millions of others who must pay taxes on income used for housing expenses. In any event, the Supreme Court has rejected the view that the mere payment of a generally applicable tax may qualify as a substantial burden on free exercise.

* * *

icon-mic-upLet’s discuss.

 

Comments

  1. We ran into this issue with my last church. We had a huge fight over whether to ordain a staff member as a children’s pastor so that he could save on his taxes with the “Housing Allowance” loophole. To me it seems, at this point in history, Churches should function on par with other non-profit organizations, with the ability to lose their non-profit status if they engage in activities that violate the provisions of their non-profit status. That would include not treating clergy as somehow special in regards to tax laws; just because their salaries supposedly come from donations should not make them not have to be subject to the same taxation laws as every other earner in the country.
    Additionally, I have a huge problem that clergy can opt out of social security because ‘they don’t believe in it’, when the rest of us have to pay in whether we want to or not. It has never made sense to me why clergy get tax breaks, and after my experience with my last pastor, whom the church paid sacrificially and we were lucky if he wrote his sermon before 8 pm Saturday night and never seemed to be available to the church members, I am sure these perks must be abused more than not.

    • I have seen them abused, personally. (The information I am going to discuss was not publicly advertised of course but it was available to anyone who asked, fwiw.) A pastor making an income well over the local median, paying mortgage on a home that is valued at over three quarters of a mil (well over twice median home price for the area), paying taxes on a salary equivalent to a Starbucks shift manager. Yeah nope. That strikes me as very unsavory and an abuse of what could have been a nice policy. This was not at any kind of megachurch, either, but a struggling mainline.

    • “I am sure these perks must be abused more than not.” That is debatable. In addition, Pastors, since they are usually treated as Contractors or Self-Employed have as many downside to their pay structure as upside. They have to deal with a more complex tax environment than you and I. Still, I wonder if they should be getting tax benefits that aren’t also offered to any other self-employed person. But in general I am opposed to any sort of Federal tax increase (our Federal government is the most wasteful organization in our nation) so if they can keep this tax break, more power to them.

      • First of all, I see viewing most pastors as independent contractors problematic from the get-go. Any other employer with a position as integral to its functioning would HAVE TO recognize the pastor as an employee; yet another strange taxation loophole in the church system, though this one tends to be at the disadvantage of the pastor. I know that churches, especially ones with boards lacking knowledge of mathematics and taxation, have used the inde contractor status to make it look like a pastor’s compensation package is much better than it actually is due to the 15%+ federal payroll taxes that the pastor will have to pay on his own. However, I would imagine that this contributes to pastors saying that they have a moral objection to social programs, and thus getting out of most of the tax….

    • Adam Tauno Williams says:

      > just because their salaries supposedly come from donations should not make them
      > not have to be subject to the same taxation laws as every other earner in the country.

      +1

      And all these loop-holes then require over-sight, which requires overseers. Just expensive bureaucracy so someone can have a tax-exemption. This makes no sense. They should pay like everyone else.

    • I am a pastor, and I receive a housing allowance. But I also am required to pay both the employees and the employer’s part of social security and Medicare. For me, it is basically a wash. In other words, I am no better offer, tax wise, than I would be if I was, say, a teacher or lawyer.

      As for the possibility of claiming exemption from social security: well, it is very hard to do. Basically I would have to prove I was in some sort of religious order that made a moral stand against those. Plus, I would then receive no social security benefits when I get old. I know dozens of pastors and none have taken the social security exemption.

      • Dan Crawford says:

        The so-called “benefit” to clergy may actually be a benefit for some. I’ve never experienced it as a benefit – even when I hire a CPA knowledgeable about clergy tax law, I often pay more in tax that a parishioner making several 10s of thousands of dollars more than I. The law is itself so complex, the benefits so negligible and the cost of preparing a clergy return so daunting, that I’ve often wondered whether pursuing a full-time call to ministry ultimately harmed my family financially. I would have no problem with giving the clergy tax “exemption” up if an honest, simple tax system that did not permit the outrageous loopholes meant to benefit the wealthy were in place. But that will never happen in my lifetime.

  2. Mike, I knew years ago that this day would be coming. It was only a matter of time.

    But as much as we Americans like to cry “separation of church and state,” on this issue the church has been in bed with the state all along. When the church petitions the state for favors, once upon a time, there will come a time when there will arise a Pharaoh that won’t remember Joseph. That time is now. If we give the state the right to determine that pastors don’t have to pay certain taxes, we at the same time necessarily give the state the right to determine that pastors will have to pay those same taxes if the state wishes it so.

    I’m guessing the result of all this will be an increase in pastors’ guilt tripping to increase one’s tithing to cover the increased tax that affects the pastor’s paycheck.

  3. I fail to understand why clergy should merit tax benefits which aren’t available to non-clergy.

    If you’re not gonna offer a parsonage, money shouldn’t be considered an equivalent. Same as if you’re not gonna offer healthcare, not gonna offer unemployment insurance, not gonna offer an IRA, nor any other benefits which usually get tax breaks. (Incidentally, churches and non-profits shouldn’t be exempt from offering the same benefits other jobs must. Christians should have much higher standards for fair compensating their workers, than do every other organization. “The worker is worth their hire”—and if not, don’t hire ‘em.)

    I can understand why certain pastors would rather take the credit than live in a parsonage: There’s too little privacy; it feels like (and is usually treated like) a rental, not a home; and if you lose your job you automatically lose your house too. When pastors are too dependent upon the church, this’ll tempt them to appease it, instead of serve it with the truth it needs. But that’s hardly the entire fault of a parsonage: A really nice income will tempt them just as much.

    And considering the style in which certain pastors feel they ought to outfit their houses (Steven Furtick naturally comes to mind) certain pastors perhaps should live in parsonages. The better to not focus on building a home on earth, but a home in heaven.

  4. Perhaps this exemption can be abused. But if the money goes to government, it is certainly abused. This is confiscation of wealth from the people to the state. This kind of policies were implemented here in Finland, and the tradition of vicarages was destroyed. The next step is taxing church buildings. Supposedly they are so valuable cultural monuments that there will be huge taxes.

    • Adam Tauno Williams says:

      > The next step is taxing church buildings. Supposedly they are so valuable cultural monuments
      > that there will be huge taxes.

      This is a ‘slippery slope’ argument; there is no reason this is true. NPOs of all types avoid property taxes – actually that depends on the state and municipality, not the Fed [here in the USA]. This does not correlate to payment to employed individuals, it is a different code.

  5. MelissatheRagamuffin says:

    I think they should all be glad they’re not Quakers who don’t believe in paid clergy, and dismissively refer to paid clergy as “hirelings.” Yet, there are individuals who are expected to essentially function as clergy while maintaining full time employment. 100% of my husband’s leave time every year goes to the service of the yearly meeting.

    • Isaac (or possibly Obed) says:

      I’m a bi-vocational clergyman whose day job is as a self-employed residential real estate appraiser. I get no leave time. Whether it’s vacations, synods, clergy retreats, continuing education, or even a weekday funeral, the time I’m spending away from the job is money that’s not being made on the job. On the one hand, that’s kind of rough. On the other hand, as my own boss, I have the freedom to make those kinds of calls. But, for me, it’s definitely true that with the exception of a couple of long weekends to visit my family and/or fiance, all my time off goes to the church.

  6. I agree that this day has probably been coming for quite a while and, in the abstract, it probably needs to come. I’ve always been uneasy with churches claiming tax exemptions and crying freedom of religion at the same time. The real problem, if this ruling stands, is that it may expose the many churches that do not pay pastors all that much and count on this exemption to more or less augment their salaries.

    • Headless Unicorn Guy says:

      Don’t forget the Culture Warrior types screaming “PERSECUTION!” and the End Time Prophecy types finding this Fulfills some Prophecy in Daniel or Revelation. I’m surprised we haven’t gotten any comments along those lines.

  7. As a 50 year old who is about to go into ministry, for a church offering a parsonage as part of the package, this certainly caught my attention. I’ve been reading up on the convoluted tax rules for clergy. Having been self-employed for 10 years and preparing my own taxes, I have some catching up to do.

    My take on it is basically, “render unto Caesar…”

    If the tax break is legal, I’ll take advantage of it. If not…it won’t kill me I guess.

    The tax issue aside, it’s still a good deal for the church to offer the parsonage. The building is paid for, and so makes hiring a full time pastor within reach for them. Personally, here in northern New England, more churches should be keeping their old parsonage arrangements. The recent turn in RE markets proved that a housing allowance is not the best solution for all.

    • Dave, I don’t think this specific ruling affects the parsonage aspect. It’s my understanding that a church can still include a parsonage in its compensation package for a pastor, and that the pastor need not pay income taxes on it as income. However, I think it still has to be included as social security income.

  8. I read once that a minister’s housing allowance cannot exceed the fair rental value of the house. If that is the case then no doubt many are abusing that allowance. However, I seriously doubt the government is losing that much money in the grand scheme of things, especially compared to other tax breaks. I never have understood this idea that being ordained is some great tax break. Ordained ministers are considered self-employed and must pay the full 15 point whatever percent of the social security tax, whereas most employed people only pay half that amount, with the employer paying the other half. How are ministers self-employed when the church can fire them at any time? Nor is living in a parsonage free, though it is a lot cheaper than having to buy or rent. Ministers are also required to report the fair rental vaule of the parsonage for social security tax. Now I know that ministers can opt out of Social security, but you are supposed to have real religious convictions against it in order to opt out. Most don’t, and would have to be dishonest to do so. If the housing allowance goes it won’t affect me all that much because I’ve been honest about what the house I live in is worth and what I spend. Not all ministers, in fact most regardless of denomination or political persuasion, live high on the hog. Quite frankly most struggle to get by, and we all pay taxes unless we are being crooked.

    • It really doesn’t matter what amount the church designates for housing allowance — when filing taxes, the pastor can still only claim what he or she has actually spent. If the exemption is being abused, it is because pastors are claiming too much as housing expenses.

      • I don’t follow you Mike. Of course a pastor can only claim what he has acutally spent. My point was that by law it can’t exceed the fair rental value of the house. But I just did some research on this and found out how pastors manage to consider their houses as having such a high rental valure. They considered the value as if they were to rent it fully furnished and including utilities.
        For any who don’t know these are the current rules for determining how much can be deducted as housing allowance:
        It must the the lowest of these three options:
        1. The amount set by the church
        2. The amount of actual housing expenses
        3. The amount of fair rental value (fully furnished and including utilities).
        Pastors living in a parsonage need to remember that if you try to give your parsonage a high rental value, you might be able to have a higher housing allowance, but you will wind up paying more for social security.

  9. As Umi referred to, this has become so abused, especially in the non-denomination world. As opposed to the mainline denominational world, ordination has no meaning. Who do you ordain? a temporary youth ‘pastor’ who has no credentials?

    And don’t get me started on social security exemption abuse, that is horrendous. We need another article just on that subject, pastors and congregations routinely outright lie about that one. They say they are morally opposed to government providing care for pastor when 1/2 or more of the congregation lives on social security.

    • Allen, what I am opposed to is the gov. taxing money given specifically for the ministry of the gospel. I do not think the gov has a right to tax us for most other things either. But when I was ordained and given an opportunity to opt out of SS, I did it for the reason above. That was well over 35 years ago. I am now 64 years old and while I still believe that just as strongly, I face the fact that I will not ever retire if I am to provide for my wife and I in the years ahead.

      • Adam Tauno Williams says:

        > Allen, what I am opposed to is the gov. taxing money given specifically for the ministry of the gospel.

        Which is *NOT* what is happening. They are taxing the income of an individual.

        > I face the fact that I will not ever retire if I am to provide for my wife and I in the years ahead

        And when you unable to provide?

        • In most churches I am familiar with, staff salaries and benefits make up by far the major portion of the budget. And then facility costs. These are indirect means of supporting “proclaiming the gospel” and important, but our giving to direct mission activity is very small in comparison.

        • What I am talking about is my income. My sole source of income is what is given as I do the work of gospel ministry. “And when you unable to provide?” I’m not sure what you are asking.

          • Adam Tauno Williams says:

            >What I am talking about is my income. My sole source of income is what is given
            > as I do the work of gospel ministry.

            Which is your income; how it comes to be is simply not [or should not be] relevant.

            > “And when you unable to provide?” I’m not sure what you are asking.

            You stated: “I face the fact that I will not ever retire if I am to provide for my wife and I in the years ahead”. That is all well and good, but life very frequently does not work that way. People get ill, injured, or incapacitated in a myriad of ways. You can only “not ever retire” so long as you are capable of working [and finding someone willing to pay you, regardless of the means of that payment].

  10. Lorene Horst says:

    As a tax practitioner I have seen this law being used….housing allowance and opting out of Social Security, etc. They are supposed to report all the money that they are given …ie handed to them because God said I should give this to you, weddings, funerals, etc. Then they are allowed to deduct mileage and such things against it…kind of like a self employed person would do. There are a lot of tax laws that don’t make life fair. I think it was probably started because preachers used to struggle to make a living therefore they decided that they should get a tax break. However like all good intentions, there are people that abuse it…..sad but true. Being a pastor should be about serving people more than making money.

    • That last line: there are really two sides to this, and in my experience, I seem to come up against more of the extremes than the moderate. Too many pastors are either grossly underpaid and starving to feed their family, or grossly overpaid and exploiting their congregation.

  11. I have added an update to the post with a quote from Family Research Council head Tony Perkins. He thinks the judge has issued an unconstitutional ruling and that it is another evidence of “banning God from the public square.”

    • The Liar Tony Perkins, lying?!?

      *looks for smelling salts*

    • Very loud sigh …

    • Headless Unicorn Guy says:

      I have added an update to the post with a quote from Family Research Council head Tony Perkins.

      OK. First scream of “PERSECUTION!!!!!” has now entered play.

    • *Trying hard not to giggle*

      One of my pet peeves is that words have meanings. Unconstitutional doesn’t mean something one does not like. Until this decision is successfully appealed, it is not, in fact, unconstitutional.

      • Headless Unicorn Guy says:

        My Dear Wormwood:
        Remember my previous letter regarding semantics and redefinition of words into their ‘diabolical meanings”.
        – Your Ravenously Affectionate Uncle,
        Screwtape

    • aka. the religious right digging a deeper grave. The irony is that their politicking over this will likely contribute to the change against their favor.

  12. Richard Hershberger says:

    My understanding, which could be entirely mistaken, is that the housing allowance exemption was an adaptation to changing circumstances. It used to be that pretty much every but the smallest churches had parsonages. The clergy often was paid peanuts, but at least had housing provided. It never occurred to anyone to tax that as income. Parsonages have been going out of fashion for at least a half century now, and possibly longer. Churches often compensated for this with a housing allowance in addition to salary. Since this was making up for something that had never been taxed, it made sense to exempt the housing allowance from taxes.

    While this may or may not have made sense at one time, the reasons why it does not today have been pretty well laid out, both in the post and the comments.

    As for Tony Perkins’s contribution to the national discourse, it aspires to rise to the level of semi-coherence. I thought that the linked article might provide more context, making it sensible. It had a longer snippet, but it was no more coherent. It seems that this is merely a knee jerk response by Perkins to something he doesn’t like by spouting catchphrases with no regard to semantic content.

    • Here’s a link to Perkins’s statement at the FRC website, Richard. It seems he is objecting because the organization that brought the lawsuit challenges Christian groups regularly, and he argues that they should have no standing in this case because there is no harm being done to them by the housing allowance exemption.

      • “…he argues that they should have no standing in this case because there is no harm being done to them…” and therein lies the strength of his argument.

        • Couldn’t one argue that a tax exemption to one class of people automatically harms those that don’t receive that exemption, in the form of higher taxes? I don’t know how the courts address that argument as it relates to the issue of standing.

      • Richard Hershberger says:

        Thanks for the link. Even while he may have a point, the histrionics are comically overwrought. Arguments about standing are inside-baseball stuff, Couching an argument about standing in terms of being repressed is simply ridiculous.

        It wouldn’t surprise me if this ruling gets overturned on appeal for just this reason. Standing is the classic way for a court to avoid dealing with the substance of a dispute. It could be that the judge in this case decided to ignore the problem in order to gain access to a soap box, knowing that it wouldn’t hold up. But the devil is very much in the details in this sort of matter. It is also possible that plaintiff’s counsel has found some way around the problem. Unfortunately, the general press is completely unequipped to report on this sort of issue in any useful way. Here is the closest I can find to any substantive commentary:

        http://www.forbes.com/sites/peterjreilly/2013/11/25/judge-crabb-issues-historic-state-church-separation-decision-on-kennedy-assassination-anniversary/

        It appears that the question of standing received a lot of attention from the court.

        I also see that the same judge stirred things up in 1987 by ruling that an Indian treaty actually counts. No wonder she is hated in certain circles!

    • Thanks for the background on the tax.

  13. What I have read suggests that what gets under the bonnets of those who challenged the law is that ministers can buy houses with tax-exempt money, then deduct the mortgage interest and property taxes they pay as well. That doesn’t seem fair to me, either.

  14. Headless Unicorn Guy says:

    CM, Jeff, could you have your Webmeister check that David Sessions link in your “Good Reads” sidebar? My AVG went off with a malware alert when I went to that page.

  15. There is also the concept that the tax break is there because the minister’s home is “supposedly” a place where ministry occurs. I.E. that the minister’s home serves as an extension of the church ministry. I put “supposedly” in quotes, because I know that the actual practice varies widely.

  16. By the way, in Canada, the limit is fair market value up to a maximum of 30% of income. It is available to full time clergy or members of a religious order. There have been some tax challenges from Revenue Canada as to whether or not teachers of religious institutions qualify.

  17. Steve Newell says:

    As an accountant, one of the first things that one learns is that so many exceptions to the US Federal Tax Code where certain groups enjoy breaks that others not receive. If one is going to argue about the housing allowance issue, then one must be willing to go against all of these types of differences.

    Are there pastors who abuse the system? Yes just like many other in other aspects of the tax code.

    • I think that’s where my feelings of ambivalence lie, Steve. I have appreciated this tax break. I know that others get similar breaks, whether deserved or not. But should my sense of whether it is justified or not be based on that criteria? I’ve pretty much come down to thinking I’ll take advantage of it if it is there and legal, but not complain if it is taken away. I don’t see any reason why clergy should receive preferential treatment and removing something like this would not amount to persecution in my eyes. What I read in the ruling sounds like perfectly sound reasoning to me.

      Now, as to the motives of the group that brought this lawsuit, I’ll confess that I have little use for what they do. I don’t think attacking religion is a worthy vocation. Whether such a group should have standing to bring a case like this is, in my view, questionable.

      • Richard Hershberger says:

        For what little it is worth, I think your pragmatic take on the exemption is a reasonable response. As for the group bringing this lawsuit. they seem to be coming from the obnoxious wing of atheism. By way of comparison, Americans United for Separation of Church and State avoids confusing favoring this separation with favoring atheism.

        • They might be obnoxious to you, but I think they provide an important service in pointing out where main stream religion is privileged in our system. When 90% of people belonged to a religious organization (in theory), it made a certain amount of sense, with large numbers of people (not just atheists) opting out of the organized religious scene, it makes less sense.

          • Richard Hershberger says:

            I classify them as obnoxious due to their tossing about of the word “freethought”, carrying as it does the implication that thinking freely will inevitably lead to their favored conclusions. I have known twits like that. Their defense usually comes down to pointing out that some self-identified Christians are equally juvenile: the “But Mom! He started it!” defense.

          • Headless Unicorn Guy says:

            All “freethinking” means is you recite a different Party Line than your Religionist enemy.

      • Isaac (or possibly Obed) says:

        Yeah, that’s how I deal with taxes too. I’ve got a good accountant who has saved me much money over when I was doing my own taxes (I’m self-employed for my day job and volunteer clergy only). I figure that I’ll take advantage of any break and loop that is legal. The tax code is so convoluted that I can’t begin to fathom the morality of individual bits of it! That’s why I have an accountant!

    • ” If one is going to argue about the housing allowance issue, then one must be willing to go against all of these types of differences.”
      I think a lot of people do. I’m also in accounting, and personally I feel like our entire tax code needs to get bulldozed and rebuilt, but I’m not going to hold my breath on that one. However, when issues of unfairness do come up in court, I’m all for them having a new ruling.
      Personally, I have all sorts of misgivings about paid clergy, from growing up as a pastor’s kid where the church my dad was employed at wanted him to work a full 40-60 hour workweek, but when he asked for a living wage they called him greedy (most of them very wealthy people at that…) to my last church I mentioned above, where we paid the pastor very well even in the midst of looming financial insolvency and had a pastor who hardly did anything at all and refused to have any accountability. Though, I think one of the roots of the above problems is the ‘Independent’ Evangelical church where the Pastor or the Board are answerable to no one above them to sort out these issues.

      • Richard Hershberger says:

        The better run denominations have some sort of controls in place to ensure a living wage for clergy. This doesn’t solve the opposite problem, of a well-beloved but past-his-prime pastor hanging on far longer than is healthy for the congregation. There isn’t really any cure for this, so long as the congregation chooses its own clergy. The best thing is to encourage a system of clergy moving around relatively frequently (five to seven years seems about right, barring special circumstances).

        When we are in the realm of independent (de facto or de jure) congregations then it is a free-for-all. At one end you have a powerful faction running the operation and treating the clergy like indentured servants (but easier to fire) while at the other end the senior pastor is the de factor (or in some cases de jure) sole proprietor of the operation.

  18. CM, I have to say, having served on staff at four different churches, I’ve yet to run across one that didn’t classify the nearly the entire salary of the pastor of housing allowance. The pastors I served under would literally itemize everything involved in maintaining a home….cleaning products, paint, nails, vacuum cleaner bags…one pastor even kept receipts for toilet paper, and justified writing this off by saying he might use some of it to wipe up spills.

    Here’s my beef(s) with this issue:

    - Ordained ministry is a high calling. It should never, ever be something you offer someone to help them out on their taxes, just because they’re a staff member at your church.

    - I know numerous pastors who live in homes that have paid their mortgages off years ago, yet still write off thousands every year as housing allowance. Others live in parsonages for free, yet still receive a large housing allowance. Does that make any sense?

    - In our little rural area, the average pastor’s salary is almost the same as the average household income.
    ( http://homiliesprayersbread.wordpress.com/2011/09/07/does-it-taste-as-good-as-it-smells-a-crystal-ball-look-at-the-future-of-american-christianity/ ), in contrast to England, where Anglican priests tend to make less than average individual salaries. I know a pastor that makes $72,000/year to minister to 80 people. Seriously. Is the $72,000/year not perk enough,. that the guy needs housing allowance, mileage reimbursement, paid vacation, and a free cell phone? I make less than half that to serve five times as many people annually in the human services field, but I don’t get a housing allowance.

    I’m a pastor, but I don’t mind saying it here…a lot of us go beyond taking full advantage of the fringe benefits. It’s funny…Justin Martyr never mentioned using a portion of the offering for paying the pastor’s housing or travel expenses…It was intended as alms for the poor. I’m all for part-time, local pastors. Frankly, a lot of them are used to hard work and don’t mind it, which makes a big difference when it comes to shepherding others. Don’t even begin telling me that pastors have to endure the midnight phone calls and what-not, and that justifies high salaries, housing allowance, and other perks…I was in a hospital ER, away from my own family, until 3:00AM last night investigating child abuse. My reward is the opportunity to be irritable today! No overtime pay for state employees!

    • Good, straight talk, Lee. Many of us ought to feel profound shame for our sense of privilege and our utter disregard of both the letter and spirit of this allowance.

    • David Cornwell says:

      Very good! Ditto for what Chaplain Mike is saying. I know lots of stories about this “sense of privilege” and the spirit of competition, and advancement that many pastors engage in. The cultural gods have rubbed off on us. And those are the gods of this world, not the Lord God.

      I’m not sure the opinion of any court can result “banishing God from the public square.” When issues of war and violence come to fore, Or drone strike on villages and weddings. I seldom hear a word about the presence of God in the deliberations. And the churches remain strangely silent. But taxation issues that affect the pastor? Different story.

      • Adam Tauno Williams says:

        >When issues of war and violence come to fore, Or drone strike on villages and weddings.
        >I seldom hear a word about the presence of God in the deliberations. And the churches
        >remain strangely silent.

        It is odd isn’t it. And then one wonders why a great number of people do not take the moral claims they make seriously; or at least one wonders that…. if one is clueless.

    • HI Lee. I notice in the article you cite the average clergy salary was #39,000. This doesn’t exactly sound lavish for a person with a seven years or so of schooling.

      In fact, with a few outliers and some mega-churches, pastors are consistently paid less than most other professionals with graduate degrees. Most churches and denominations require a seminary degree (usually a MDiv). This is three years of rather expensive education, after four years of college. It is the same amount required of a lawyer. The average starting salary of our lawyer in our country is $84,000. The average starting salary of a pastor is $44,500.

      Source: http://steadfastlutherans.org/?p=18480

      • Daniel, my point here is that the average pastor’s salary in our rural county is almost identical to the a average household income for everyone else. That includes households of doctors, lawyers, farmers, day care providers, fast food workers, and a number of households that have folks with post-graduate degrees….I’m one of those folks with 7 or so years of college education, and my household income is only a couple thousand more, with my wife and I both working full time, than the average pastor’s salary in our county. I may be an idealist, but when the word became flesh and dwelt among us, I’m pretty sure he didn’t make a lot of money. In a community of churches that claim “the Bible as sole authority”, I don’t see a whole lot of pastors living sacrificially, taking up a cross, in terms of income. Most are living more comfortably than they people they are called to minister to.

    • Others live in parsonages for free, yet still receive a large housing allowance. Does that make any sense?

      In this instance, I believe yes. It’s being shrewd. The trouble with a parsonage is that the Pastor will never own it, and he has to retire eventually. Then where does he live? Therefore some of them live in parsonage yet buy a house for equity and retirement residence, renting it out in the meantime. Should they receive a write-off? I dunno. But I do know why they do it.

  19. Adam Tauno Williams says:

    > The court’s ruling says that the tax exemption for housing violates the
    > establishment cause because it grants a special privilege to clergy and
    > thus amounts to preferential treatment for religion

    The sooner the tax-exempt status of religious organizations is eliminated the better. It is not necessary and is very commonly used as a blanket behind which to hide purely political money laundering.

    That pastor’s housing should be tax-exempt in any way is nonsensical. Everyone requires housing, everyone pays for housing, and everyone pays taxes on housing [because the presence of that housing creates demand for infrastructure].

  20. I think it’s probably a good thing that this exemption is going away. I don’t see any reason for pastors to receive preferential treatment in this area, and it seems to be an easy privilege to abuse. All of this is bad for the witness of the church to the world around it. Pastors would still be able to write off the interest on a mortgage if they itemize, just like everyone else can.

    I don’t know why, but in my experience, some of the most unethical behaviors regarding money that I have ever witnessed have come from career Christians in “full-time ministry,” many of whom I thought were deeply committed. It’s been a factor in my journey into the post-evangelical wilderness. This includes behaviors as petty as avoiding the tolls on a toll road by exiting it before the toll both and entering a little later at a little-known entry point. Others were much, much more significant ethical breaches. All left me shaking my head. Some left me weeping.

  21. Perhaps many do not realize the disadvantages (tax-wise) that also come from being a pastor. According the IRS, ministers are employees in terms of their federal tax, but self-employed in terms of social security and Medicare. The result is that, in addition to their federal tax, they must pay a full %15 percent of their income to social security and Medicare. I have no idea why this is so.

    Any discussion of the government “subsidizing” pastors is incomplete without taking this into account.

    • Whether pastors should be able to “opt out” of social security is a separate issue. I don’t know of any who do because you then also lose any social security or Medicare benefits, and you have to fill out a form saying you are opting out because of religious objections.

    • I’m right there with you Daniel. My taxes actually went up after I got ordained. If the housing allowance needs to go away fine, but let’s take a look at all the other tax breaks as well. Everybody is always for getting rid of tax breaks as long as it is someone else’s tax break and not theirs.

    • Dan, this is certainly true, but it is true of any self-employed person. The handyman who works on my house, and who may be my parishioner, pays full Social Security and Medicare too, but receives no housing allowance. As a pastor, I sometimes feel uncomfortable about that.

      • Mike, I see your point. However, I don’t see why clergy are considered self-employed for this, nor do I think most people consider this when talking about clergy salaries. In any case, for me I don’t think I am ahead (tax wise) as a pastor, as opposed to being a teacher, lawyer, or such.

        • I agree. Those who work for companies that contribute to Social Security and Medicare do have that benefit. I guess the question would then involve having churches participating as businesses that are required to pay SS and MC for their pastors.

          However, as I have discovered, pastors have other benefits as well. In the churches where I’ve served, pastors are paid a full salary plus benefits, with the church covering the full cost of those benefits (no “employee” contribution). However, as a chaplain, I am required to contribute to pay for my benefits. So, one who works for a business makes $50,000 and then has benefits subtracted from that gross salary, whereas a pastor has a $50,000 salary and benefits are then added on. This was a large part of me taking a 1/2 cut in take-home pay when I left the church.

  22. Christiane says:

    . . . It’s the people with families who would be hit hardest. And that means pastors’ wives and children will take a hit. There would be something immoral about springing this trouble on so many pastoral families out of the blue.

    Change can and will happen;
    but when it comes, let it be done humanely, not just for ‘God’s sake’, but because that is who we have always been as a people.

    Think about this:
    courtesies and breaks for clergy . . . have they not been our nation’s ‘thank you’ for services rendered to our people?
    The hospital visitations, performing marriages, conducting funerals, community projects that benefit everyone inclusively, providing chaplaincies to the military, to hospitals, and to hospice, providing front-line counseling for the troubled and the grieving
    . . . the list of service to our people is endless . . . what is wrong with some kind of courtesy tax-break in support of this vast and devoted army of help to a grateful nation ?

    • Adam Tauno Williams says:

      > have they not been our nation’s ‘thank you’ for services rendered to our people?

      This representation operates under the assumption that the majority of them have rendered services of substantive value.

      > performing marriages,

      for which, in my experience, they charge.

      > not been our nation’s ‘thank you’

      Our nation is secular and generally does not say “thank you”; even to those who deserve it [it does go out of its way to say thank you to many, less deserving, if it is politically expediant to do so]. And, in actually, I think we are more of a “country” [nation in the legal sense] than a “nation” in the community/ethnic/cultural sense.

      > conducting funeral

      for which, in my experience, they charge.

      > community projects that benefit everyone inclusively

      such as? In many years I can think of a rare few pastors who participated in the larger community in any way what-so-ever.

      >providing chaplaincies to the military

      Military chaplains get paid, directly.

      > to hospitals, and to hospice, providing front-line counseling

      Very noble professionals all, but increasingly professional as well.

      > the list of service to our people is endless

      That is one estimation. I would estimate it quite differently; as limited and exclusive, and quite rare.

    • Final Anonymous says:

      Yeah, I don’t see it either. My former church had moved to laity performing hospital visits, counseling services, even Sunday services for the nursing homes and some weddings and funerals. At least one of the pastors was outspoken in his relief at no longer having to perform pastoral care, because in his words he just wasn’t a people person.

      At one point they were using the term “Executive Pastor” instead of “Assistant Pastor,” and I think it actually fit quite nicely. I’m sure they worked hard; just that it was more like the work of a CEO than a pastor. And no, I feel no need to give CEOs tax breaks.

  23. Bill Garrett says:

    We could discuss abuse of the exemption and SS/Medicare for a long time, but as a pastor, I see things like “give unto Caesar” right from the mouth of Jesus written down in Scripture and reflect on the fact that the exemption is not a constitutional right as per Tony Perkins, but was something extended to religious institutions in the past, and goes, as far as I know, for religious leaders of any religion and therefore is not anti-Jesus or anything. If the climate is changing, I don’t think we should be revving up a fake constitutionality debate and should call out Mr. Perkins on his dishonesty.

    • David Cornwell says:

      Exactly. And being a pastor isn’t a special status in a democracy, and especially one that denotes privilege. Being ordained in a church may give status within that group or denomination, but should be limited to just that.

      • Adam Tauno Williams says:

        > Exactly. And being a pastor isn’t a special status in a democracy

        Being a pastor isn’t a special status in a *secular* democracy, like ours. There are many functioning democracies with official churches, which recognize a privileged specific religions. That just is not the democracy we have [in the USA].

  24. MikeInIowa says:

    I have an idea! Let’s abolish the income tax and set a flat percentage consumption tax with no exemptions or write offs. Then churches, non-profits, pastors, corporations, upper class, lower class, middle class, whomever you are will pay taxes in the amount of products consumed. Yeah, never mind! Just a dream.

    • I actually agree (our tax code is ridiculous) with the caveat that this would seem to be regressive (that is, hit the poor people hardest).

      • MikeInIowa says:

        It could be tweaked for the poor. But remember they would tend to consume less anyway. But the most attractive thing about this for me would be no longer having the need to file. No longer would the government be sticking their nose in what it is that any of us make. They can hear from me when I sign up for selective service, the census or if I apply for a job with them. Income should only be an issue when applying for benefits. My2cents.

        • Tim VanHaitsma says:

          The poor spend more of their income as a percentage on taxes in a flat tax consumption model. That is simple math. If a poor person makes 21k per year what percent of that is spent? About 100%. If you make 100k per year what percent is spent? If you understand the miracle of compound interest live like the poor for a couple decades, then reitire.

    • Josh in FW says:

      I’m more of a flat tax guy, but would support any kind of simplification and greater transparency.

  25. Why would we expect anything less when you have “mega pastors” who, in addition to 6 or 7 figure salaries, also receive 6 figure “housing allowances”? It may be reactionary, but I remain surprised that it took this long.

  26. This is somewhat depressing news for myself. I don’t intend on ever becoming “clergy,” but the LCMS offers licensure allowing for certain tax breaks for certified, rostered, and called vocational church workers. This includes positions with such titles as “Director of Christian Education,” “Director of Christian Outreach,” and the one I am currently pursuing, “Director of Parish Music.” The coursework for the DPM certification has been at least as intense as the year I spent in grad school, and amounts to a two year process. It has been an exhausting process and a contributing factor to some major burnout I am experiencing. Whether or not it’s “fair,” I was certainly looking forward to the possibility of some tax breaks, it would certainly do a lot for my family right now. I understand some people get criminally rich off “non-profit” “ministry,” but they represent a very small percentage of people in this line of work. I know too many pastors who are disgustingly underpaid, and loosing the tax breaks would seriously break them financially. I guess the original idea was to incentivize people pursuing religious vocation. Perhaps the government or society generally doesn’t see this as something beneficial to the common good anymore? I dunno. I’m not gonna complain it’s “unfair” if they take it away, ’cause all of life and politics will not be fair either way, but I kinda see it as more of a boon than a curse, for applicable individuals and for society generally. I could understand how atheist fundamentalists are offended and perceive this as an injustice, but at the same time, most of them will see any slight form of deism as oppressive and intolerable. I don’t really think their views are the best litmus for what is beneficial for society at large, most of their thinking seems so clouded by anger and “there is no god and I hate him.” Imagine a society dominated by that ethos!

    • “there is no god and I hate him.”

      So true. I have made the observation to an atheist work acquaintance/friend that “You talk like you believe in God, but you just don’t like Him.”

  27. And seriously, Chaplain Mike, the Fred Clark article? Apparently, if you believe in “Biblical inerrancy,” you are a pro-slavery racist bigot! Who knew? Bovine defecation, I say.

    • Sorry Miguel, we often post links to articles with which we do not wholly agree. In this case, he made some good points giving perspective on how people did not “read” their Bibles over the course of time. The racist stuff he can keep, IMO.

      • Fair. My thoughts exactly. Up to about the just after the Reformation he had some good points. But he just took a rhetorical nose dive at the end that was a real stinker. His early arguments are sound and I’ve used them as discussion points before, but he drastically went from intelligent reflection to a fascist “have you stopped beating your wife” argument out of nowhere. It’s one of those progressive quirks that keeps me from taking their views too seriously.

      • Adam Tauno Williams says:

        > The racist stuff he can keep, IMO.

        +1

        He does not do anything to justify why “1619: First 20 Africans sold into slavery in Jamestown.” belongs in his time-line in relation to biblical literacy. It seems out-of-the-blue, it is not used in or by his argument. The racist stuff then takes over his post; is he just trying to link the slave trade to Evangelicalism?

        Not that there are not significant racial tones in Evangelicalism, but (a) they do not really relate to biblical literacy and (b) I suspect their origins are more banal and recent (like 1930′s/1940′s urban [anti-]planning amplifying historical bias).

        I was with the author for ” The prevailing hermeneutic, in other words, was nothing like the individualistic, face-value literalism that characterizes the approach of modern inerrantists.” But even “The prevailing hermeneutic was to interpret the Bible as meaning what the church says it means” seems disingenuous bordering on snarky.