Thursday, September 27, 2012

More housing allowance follies

Robert A. Schuller is the son of pioneering pastor Robert H. Schuller whose Crystal Cathedral is an architectural wonder and lately a Roman Catholic Crystal Cathedral. He is in the news recently because he has a very nice home in Laguna Beach California. Although it is situated pleasingly above a fabulous beach, it is figuratively and financially underwater. He owes $1.6 million and cannot find a buyer at that price.

The Orange County Register puts it like this:
The Rev. Robert A. Schuller — former senior pastor of the Crystal Cathedral and the son of Crystal Cathedral founder Robert H. Schuller — is one of the latest homeowners to feel the effects of the nationwide housing crash.
With a foreclosure sale looming in November, Schuller is seeking bank approval to sell his Laguna Beach house “short” – that is for less than the $1.66 million he owes on two mortgages on the home.
A foreclosure auction at the Orange County Central Courthouse has been set for Nov. 2, but Schuller said he has a buyer and is just waiting for the bank to decide whether to accept the purchaser’s offer.
No news in this. The Crystal Cathedral and Schuller family's squabbles and troubles have been widely reported. The only reason this is on my radar at all is found in the following paragraph:
Schuller said he’s not having financial problems, but doesn’t have any cash flow because all his assets are tied up in two television networks, Youtoo and FamilyNet. He also lost a housing allowance tax deduction available to clergy when he left his position as Crystal Cathedral’s senior pastor in 2007.

Call me crazy, or cowardly, but if I owned a $1m plus beach house and was underwater with it, I don't think I would have the guts to whine about not receiving the housing allowance tax break on it anymore.

As a pastor with substantial church income, Schuller utilized the perfectly legal income tax deduction available to clergy but not the ordinary citizenry, the Minister's Housing Allowance. Judging from his jumbo mortgages, his debt service alone was maybe $10,000 per month and adding other housing expenses, one might guess that he was near $200,000 annually in tax free income, courtesy of the US Gummit tax policy. He lost his ministerial position and with it the lucrative Housing Allowance deduction. Things are tough, what with having to pay for the beach house and not even get a huge tax break on it anymore.

To try and make ends meet, he was advertising rooms for rent for $700 per night or $5000 per week. It is a nice little bungalow.

One wonders, why is the government giving this tax break? Shouldn't there be some cap on this? Is it serving any legitimate purpose to subsidize million dollar beach homes for the few ministers who have enough income to live in them? Is there any way to justify this tax policy at such stratospheric income and housing levels?

Schuller is not the most outrageous example of this and, sure, tens of thousands of us find the housing allowance to be a welcome, very modest, tax break. But we also are liable to get caught in the backwash from examples like this.

For the record, I do not see a constitutional problem with the housing allowance. I do see public policy and image problems from allowing it to be used in such a fashion. Sure to comment on this is my cyber acquaintance, Robert Baty, retired IRS appeals officer who is keen on seeing the whole business ruled unconstitutional. A court case is under way on it. I suppose at some stage our SBC lobbying arm in DC will weigh in.


Anonymous said...

The optics of conservative Christianity over the last several decades is one of selfishness, greed, and war. Only because ministers from less conservative congregations have used the benefit more reasonably will it survive. But conservatives will organize and take credit for the survival of the tax benefit, nonetheless, given their high threshhold for perceptions of shame.. To have gained so much power in the country only to make religion seem so negative to so many in so short a time.

Tim Dahl said...

I will not be surprised if we loose this tax deduction in the future. I'm with you. I see nothing legally wrong with it. But, it isn't a "right" either. As long as individual pastors misuse it, we'll always be in a position to have it taken from us.

Tim Dahl

Tom Parker said...

This allowance needs to be revised because of the ones that are abusing it, but IMO it should not be done away with.

It really does benefit the ones who do not abuse it.

Robert Baty said...


I appreciate the honorable mention.

I haven't been keeping up with Schuller's situation and appreciate the update.

Unlike in the Rick Warren case, and the original FFRF case, it is curious that the religious lobbyists have not been conspicuous regarding what their plans are regarding the future of the housing allowance and how they might try to thwart the FFRF efforts to have IRC 107 declared UNconstitutional.

Just what is that "SBC lobbying arm in Washington, DC" doing on this matter?

Two of the Liberty Institute lawyers had an article published recently in the Texas Review of Law and Politics in which they argued that the law was salvageable but the administration of the law had problems.

Phil Driscoll asked the Supreme Court to review his case as to whether or not he can claim hundreds of thousands of tax free income as a "minister" on multiple homes. Conference on that case was scheduled for 9/25/2012 so we should know whether SCOTUS is going to accept that case or not.

I think we know why the Government has been giving out this benefit.

The more important question, in my opinion, is why hasn't the Government done something about it long before now?

I think we know the answer to that question too! It's a shame!

Peter J. Reilly may get Jill Stein to address this issue within the next few days. If so, maybe that could move the issue forward a bit and compel Romney and Obama to address it as part of their campaigns' interest in "God", the Constitution, and tax matters.

Thanks again for your honorable mention and your interest in this important public issue.

William Thornton said...

Southern Baptists have an Ethics and Religious Liberty Commission which is "the public policy arm of the Southern Baptist Convention." They have offices in Nashville and DC. They will weigh in on the side of all of us little guys who take the HA.

Tom Parker said...

William you said:"Southern Baptists have an Ethics and Religious Liberty Commission which is "the public policy arm of the Southern Baptist Convention." They have offices in Nashville and DC. They will weigh in on the side of all of us little guys who take the HA."

Is this headed by Richard Land?

William Thornton said...

Yep...the retiring RL.

Robert Baty said...

When the FFRF filed that first suit, since dismissed by mutual agreement, in California, the Pacific Justice Institute had an intervention action filed within a week, as I recall.

They put up a "little guy", the Baptist preacher Michael Rodgers, and 100 anonymous others as their clients wanting to help the Government defend the law.

Where are the interveners this time around?

What are they up to?

What tactics are they planning to try and execute this time around?

Rick Warren claimed to be championing the cause for the "little guy" back when, but where is Rick Warren on it this time around?

A curious silence!

Have they realized this time around that they can't do what they did in Rick Warren's case and expect to salvage the million dollar tax free benefits for the preachers and salvage other similar abusive exploitations of the law (e.g., basketball ministers with tax free income)?

Would be nice to get some feedback from those powers that be!

Anonymous said...

Many of these high profile conservative ministers have been an embarrassment to the Christian faith for decades and this is just another example of their on-again and off-again integrity, both in what has transpired and in their silence.

No one tax policy for ministers will capture all situations, but one could be developed with several criteria so that the benefit really is in the best interest of the faith that the ministers serve. And should ministers raise issues about proposed revisions in such as way as to block their subsequent implementation, then perhaps a different strategy needs to win the day: "OK, let's do away with the whole thing."

The problem is that many of these ministers have much political pull and the latter will be very difficult and the former a reality. Thus, a nation, said to be built, by these individuals, mind you, on Judeo-Christian values, is not very Judeo-Christian if their practice is to be instructive.

Many of these ministers will be first in line to cut social services, preaching self-reliance, instead, while happily taking this often un-needed benefit, in addition to decrying the weakness of some incapable of managing their money on lottery, while also happily accepting the proceeds from such people for the financing of their children's education. At some point, however, all of us are implicated in something, but this is low hanging fruit, but don’t expect ministers to show us a better way. They prefer the richer, privileged way when given a choice.

Polemical. Yes. But in a proper direction.

Robert Baty said...

Peter J. Reilly, Forbes on-line tax blogger, had his interview with Jill Stein, the Green Party presidential candidate.

She indicated that she thought IRC 107 as a violation of the principle of separation of church and state.

Maybe that will help garner more media and public attention and, just maybe (my fantasy), help bring the matter to the attention of the major party candidates and get them to publicly announce their plans for the future of IRC 107.

Here's the link to the story:\ andidate-jill-stein-part-one/

Peter Reilly CPA said...

One presidential candidate has weighed in as being opposed to the parsonage allowance. Jill Stein of the Green Party. You may want to go over to and weigh in there rather than just preaching to the choir.

Robert Baty said...

From Phil Driscoll's Supreme Court Docket Record:

> Docket No.: 12-153
> Date: Octobert 1, 2012
> Entry: Petition DENIED.

I think it is the case that, outside the 11th Circuit that ruled against Phil, ministers may continue to claim the income tax free housing benefit on more than one house.