Unless one of my ministerial colleagues has been off on a mission trip to Mars for a few months, he or she will know that the housing allowance, our sacred clergy tax break, was ruled unconstitutional last fall by a federal district judge. Fear not, the implementation has been stayed pending appeal and the decision only applied to cash housing allowances, that is, those who do not live in church provided housing and who instead receive a check from their church for their housing. This tax treatment is not altogether different from any employee who lives in an employer's house for the employer's convenience. Think caretakers (though I recognize that we pastors abhor being considered as such), those who live in an apartment that is part of a motel or mini-warehouse - stuff like that.After the court decision, our own Russell Moore very new at his job with the Ethics and Religious Liberty Commission was interviewed by Forbes tax blogger pal of mine, Peter Reilly, who has become the go-to guy on the housing allowance. He reads the manuals, cites the subsections, and peruses the court decisions. He didn't find Moore in much of a mind to weigh in on the matter, perhaps because he wasn't all that up to speed on it. We can count on Moore to stir the ERLC for an amicus brief somewhere in this process, though.
Absent federal court decisions, the clergy housing allowance isn't much of a news item unless you start poking around and find ministers in huge homes who allegedly take enormous sums of their pay in the income tax free housing allowance.
Stuart Watson is a reporter in Charlotte who has given some scrutiny to a minister there who is fabulously compensated and who lives in an palatial home. No, not Jim Bakker. He is out of jail and back to work elsewhere. Watson is onto Stephen Furtick and others. His recent story featured images of honest-to-goodness clergy mansions, all of which are eligible for huge sums of income tax exclusion. This is news, not your local pastor who might have a housing allowance of two thousand dollars a month or so.
What Watson is demonstrating is that the amount of income that clergy can exclude from income tax (this isn't a deduction, all money paid to clergy as a housing allowance is not reported as income at all) is virtually unlimited. That is, the limit is only on how expensive a mansion the minister can find to buy. If he lives in a hovel whose fair market rental is $500 per month (furnished, including utilities) he has a limit of $6,000 per year. If a megaminister finds a fabulous mansion on the beach whose fair market rental is $150,000 per month, he can exclude $1.8 million in income from his income tax bill. Biltmore house? Same deal. Let a megaminister rock star buy that and the government will allow the exclusion of whatever its fair rental value is.
Suggestion for my clergy brethren: Print out nice, color photos of the houses Watson features and take them to church. Show them to the ordinary working people in your church, to young couples with a runny nosed toddlers, to single moms, to fixed income seniors. Ask them if they think a minister ought to be able to have government assistance in living in such an expensive home?
If you find any who say "yes" immediately put them on the church committee that sets your salary. Chances are, people will scratch their heads and wonder how this came to be. It just doesn't smell right.
Stuart Watson called me a while back to explore the housing allowance. I gave my opinion: I don't think it is an unreasonable bit of tax policy but should be capped. As it stands, the average SBC minister benefits a small amount. Not that big of a deal in regard to tax revenue and not unfair at the average church level.
Why we hesitate to consider any reasonable changes that might eliminate the mansions is beyond me. Seems like that would be a prudent, ethical move. Then again, the judiciary might just scrap the whole business for us. Poof! No more housing allowance. You wake up one morning and you are just like a mere mortal, only a little poorer.
Seems that clergy have dipped in the degree of respect they receive here in America. Surveys rank us below dentists who inflict grievous pain on patients, baby sitters who get less than the minimum wage, and cooks (next time you are in Waffle House, be more respectful of the cook, he/she is ahead of you). The housing allowance as it presently stands doesn't help us in this regard.
One day these chicken will come home to roost. Until then, feel free to fashion some defense for the megapastor nearby whose income that is excluded from taxation is several times your entire compensation package.
Try not to feel like a chump when doing so.
15 comments:
William, do you think Moore should give his view--printed or verbal-- on this for all Southern Baptist ministers? It appears that some SB pastors may be playing fast and loose with the Housing Allowance.
It certainly appears to me that ethics--that is lack of ethics- is at play in how some SB ministers misuse this available tax provision.
The appeal of the recent court decision will get a response from ERLC, the Baptist Joint Committee and other organizations in support of the housing allowance being constitutional.
I don't think Moore will offer an opinion about the unlimited amount of income that the present law allows to be excluded unless there is some legislation that proposes a cap. In other words, I'm guessing that the ERLC doesn't consider the lack of a cap to be an issue, nor the clergy mansions.
You said:" I'm guessing that the ERLC doesn't consider the lack of a cap to be an issue, nor the clergy mansions."
Only Moore can answer the question--but I would love to hear his answer as to the lack of a cap or clergy mansions not being issues.
He may have commented in the past (I'm going from memory) that these were extreme cases, not widespread.
When I spoke to Moore he indicated that the mega pastors were such a small minority they were not worth considering. He did not know that Furtick was SBC. When I asked him whether the denomination should maybe suggest to the megas that they not be such chazzers, he said that would not be appropriate.
BTW the best way to have your comp set is a buy a board of overseers who coincidentally are also mega pastors.
Here is link to my piece on Moore
http://www.forbes.com/sites/peterjreilly/2013/11/27/southern-baptist-leadership-unconcerned-about-clergy-abuse-of-tax-break-for-housing/
I am "Ahab"!
IRC 107 should be repealed and the politicians should start over if they think they can pass such a handout for nice folks.
Meanwhile...
Colin Flood is a local Pinellas County writer, the Pinellas Reader being one of his media outlets, who has written on the election down there (special election taking place now with regular ballot voting to take place March 11, 2014) and indicated in interest in covering the IRC 107 side of the story.
He wants someone in Pinellas County to make the local angle work for him.
I am not in the area.
Can you, if you are in Pinellas County, FL, contact Colin Flood and discuss this important, national issue with him?
Following is his comment from a few minutes ago in response to my continuing effort to get him to take up the media side of the story down there.
https://www.facebook.com/photo.php?fbid=10151989519901623&set=a.10150100342731623.277115.538731622&type=1
From: A. Colin Flood
Date: Tuesday, March 4, 2014
Time: About 5:30 PM MT
Find me somebody to talk
to in St Pete area...
------------------------------
You said "all money paid to clergy as a housing allowance is not reported as income at all."
This is incorrect as clergy housing allowance is still subject to the self-employment tax.
No, what I said is not incorrect. The cash housing allowance is not included in our W-2 at all. It will have to be reported on the SE tax form (or the rental value if in a pastorium) for SECA taxes.
Many clergy like to view the HA tax break as a trade off for having to pay SECA. No law against that, but the two are unrelated.
So far my friend Robert Baty, who is either a member of or highly sympathetic to the FFRA who challenged the HA in federal court, has one harpoon in the White Whale.
I predict the big fish will get away in the end but I certainly hope Robert doesn't go down with the ship.
William,
Thanks for your consideration and comments.
It's an interesting relationship, in a sense.
One preacher has referred to me as Annie Gaylor's "useful idiot".
Others have similarly called into question, somewhat hypocritically in my opinion, my support for the FFRF suit.
Well, it's really my suit. I couldn't afford to do it personally, so I got Annie to do it.
I am not a member of the FFRF. It does happen to share my interest in this project that was ginned up by your fellow preacher at the Saddleback church, Rick Warren.
In Rick's case, Congress and the President acted quite speedily once the 9th Circuit said something, on its own motion, about first looking at the constitutional issue.
Now it seems you can't find anyone in Congress or the President willing to speak to the issue in light of Judge Crabb's ruling and the announced appeal.
At least I can't find anyone!
Ah, William, William, while I do not feel a great deal of sympathy for Mr. Furtick, I do for ministers who are underpaid and/or living in a parsonage which is taxed as income-in-kind, no easy burden for meager salaries. The power to tax is the power to destroy. I had a run in with the IRS over the issue of some taxes owed, and I had made arrangements with them to pay it on a monthly plan (I had been unemployed for some 7 months between pastorates). Anyway, one day I got a call from an IRS agent who said, "You must pay so much for three months, and that will take care of your taxes." I said, "If I do that, it will ruin my credit." He said, "I couldn't care less. You have it here OR ELSE." I am sure you know what he meant by that. And then there is the issue of religious participation in the political process. How would you like to know that a Baptist minister in Virginia led a committee in meeting with the colonial legislators and made this agreement: "In exchange for their freedom to practice their faith, the Baptist ministers would go back to their communities and encourage their young men to enlist in the Patriots' Cause. They were most successful. That leader of the Committee was Elijah Craig, and evidently he was successful. I found one colonial militia regiment in which every member of the regiment bore the last name Craig. I know I copied the name of all 2000 from a volume published by the Daughters of the American Revolution. I think it interest to remember that I live about a 50 minute drive west on Interstate from the Battlefield of Guilford Courthouse where just one of my ancestors served as in a Virginia Colonial Regiment, one of the regiments in the second line of battle. His name was Lt. Joshua Phipps. There were others through out the southern colonies who were my ancestors who were in that war. Now the US is putting us out of circulation; we are being marginalized. Soon we might well be criminalized.
"... mega pastors were such a small minority they were not worth considering."
"Small minority." True.
"Not worth considering." Moore actually said that? Not totally unexpected, however.
Moore is ready to speak truth to power when the power is bit removed?
Moore can't get this moment back.
HA is a perk of a by-gone era that largely is no longer justified, but could be justified in a very limited way. Instead, given the alleged response by Moore, he is seemingly aligning himself with those that are quick to accuse others of sucking at the government tit while not acknowledging its own place in line for such. Go for the greed and imperil the need is seems. And your chief ethics officer's apparent response to the current situation? "Did I order ham or turkey for lunch today?"
The Government filed its brief yesterday on the case in the 7th Circuit.
As a result, we should know in about a week which folks are going to be trying to help Obama out as amici and defend IRC 107.
The FFRF reply brief will probably not get filed until June, and after that we will find out which amici are going to be helping out on the FFRF side.
It should get interesting leading up to the election and finding out if any candidates dare speak to the issue.
The amici have arrived to help assist Eric Holder in his effort to defeat the FFRF, Annie Gaylor, Dan Barker, and Judge Crabb.
By my count, here they are:
(1)
AMICUS CURIAE BRIEF OF THE CHURCH
ALLIANCE, ET AL.
IN SUPPORT OF DEFENDANTS-APPELLANTS
(2)
AMICUS CURIAE BRIEF OF 624 CHURCHES
IN SUPPORT OF DEFENDANTS-APPELLANTS
AND REVERSAL
(3)
BRIEF AMICUS CURIAE OF THE NATIONAL
JEWISH COMMISSION ON LAW AND PUBLIC
AFFAIRS (“COLPA”),
AGUDAS HARABBONIM OF UNITED STATES
AND CANADA,
AGUDATH ISRAEL OF AMERICA,
NATIONAL COUNCIL OF YOUNG ISRAEL,
RABBINICAL ALLIANCE OF AMERICA,
RABBINICAL COUNCIL OF AMERICA,
TORAH UMESORAH, AND
UNION OF ORTHODOX JEWISH CONGREGATIONS
OF AMERICA,
IN SUPPORT OF APPELLANTS
(4)
Brief Amici Curiae of Eastern Orthodox,
Hindu,
Muslim, and
Protestant Religious Organizations
in Support of Appellants
(5)
BRIEF AMICUS CURIAE OF THE EVANGELICAL COUNCIL
FOR FINANCIAL ACCOUNTABILITY,
NATIONAL ASSOCIATION OF EVANGELICALS,
NATIONAL HISPANIC CHRISTIAN LEADERSHIP CONFERENCE,
QUEENS FEDERATION OF CHURCHES, AND
CHRISTIAN LEGAL SOCIETY
IN SUPPORT OF APPELLANTS AND REVERSAL
#6
BRIEF OF LIBERTY INSTITUTE AS AMICUS CURIAE
IN SUPPORT OF APPELLANTS AND REVERSAL
----------------------------------
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