Friday, April 11, 2014

Obama arguing on our side on the housing allowance

Our wonderful Sacred Clergy Tax Break, known as the ministerial housing allowance, you know, the one ruled unconstitutional last fall by a federal district judge, is on appeal and the government is arguing on our side to overturn the decision.

While that it is not at all surprising for the government to appeal a decision that they lost, it might strike some Southern Baptist clergy, very few of which express any support for our current president and administration, as ironic that we are depending on the Obama administration to plead our case.

The executive summary of the government appeal filing for busy clergy is this. The government offers several arguments. First, that the plantiffs in the case do not have standing to sue. This is rather technical and tedious. Second, that the 1954 law that provided cash housing allowances to be excluded from income tax liability on the same basis as income for those ministers living in church owned housing is constitutional because it sought to equalize treatment of ministers and make the government neutral towards such things. Third, that the allowance is constitutional in that its purpose is to avoid entanglement of the government in religious affairs.
If my executive summary falls short of the glory of lawyers due to oversimplification, sue me. If you wish to delve deeply into the filing and arguments I recommend reading my CPA housing allowance expert blogging buddy, Peter J. Reilly's article on it. He has multiple links and fuller explanation.  

Along with the government's filing on the case, numerous amici filings have been made, including one that is joined by our SBC Ethics and Religious Liberty Commission. We're with the Unitarians, Moravians, Muslims, and Krishnas on this, brethren. 

Let's look at the broad picture here. There are always a number of important church-state issues bubbling up in the courts. It is important to tens of thousands of modestly paid ministers who would be somewhat harmed by having to pay an additional sum of taxes but churches and their ministers could adjust to this if necessary without the religious welfare of our country being harmed. 

My view is that of a number of experts whose conclusion is that the housing allowance law is not unconstitutional but neither is it required to uphold our first amendment religious freedoms. Look at it this way, clergy already pay social security taxes (though there is an allowance made for those who have a religious objection to this, one that few ministers choose to employ and be exempt from these taxes) and the part of their ministerial income not excluded by the housing allowance is taxed. It's tough to argue that taxing all of our income like is done for other working stiffs is somehow a violation of the first amendment.

I appreciate our own D.C. lobbing outfit, the ERLC, making a modest effort to be involved in this, that's what we pay them over $3 million per year to do; however, if there is an ethical issue along with the constitutional issue in this housing allowance discussion, it is the reality of a growing number of ministers who are very highly paid, who live in, literally, mansions and who exclude huge sums of income from taxation through the housing allowance. The fraction of such ministers doesn't form the basis for any constitutional argument here but it doggone well ought to form the basis for an ethical argument, and one that we should make. There is no reason I can see not to cap the housing allowance in similar fashion to how it is done for military personnel who are paid a housing allowance. Thus far, I have heard no prominent Southern Baptists even raising the question of the ethics here. 

When the matter of the housing allowance is discussed among SBC clergy, what I almost always see conveyed is an attitude of entitlement. We get it. We deserve it. Keep your hands off it. My view is that it has been part of the equation for almost a century and should be kept. If the government needs some additional tax revenues, this isn't where the big bucks are. 

I'd recommend to my SBC clergy colleagues that they look at their ministerial housing allowance income tax exclusion for what it is - a nice tax break. 


Anonymous said...

Housing allowance:
The Clergy.
Well, not really, but very helpful.
Let's keep it.

Ryan budget:
The Poor.
Do not need.
Well, really, it is not very helpful.
Let's keep it.

Conservative clergy, this is an opportunity.
But you will squander it.

RLBaty said...

I asked President Obama about that recently.

He sent me a "boilerplate" response and never touched on the IRC 107 issue.

Similarly, I have not been able to get any candidates or congressmen to come out on the issue.

There is still time, and I challenge those with more political clout than me to challenge their elected officials and candidates to pressure them to come out on their vision for the future of IRC 107.

I am most interested to know what all those amici are doing behind the scenes to try and get Congress and President Obama to do what they did for Rick Warren back in the day (i.e., pass a law to keep the Court from taking up the constitutional issue).

Peter Reilly CPA said...

I'm thinking churches should have a "make our pastor whole" drive which would raise enough money to provide pastors with a FICA match and then the denominations could just ask the government to treat ministers like everybody else.