Wednesday, September 10, 2014

Our Sacred Housing Allowance winds its way through the courts

If you run across a general news report on the minister's housing allowance you should conclude that something is going on that might not be good. As long as we fly under the news radar with our Sacred Clergy Tax Break, that wonderful tax benefit by which we clergy may exclude tens of thousands of dollars from income taxes, we may relax. But, if its in the news it is likely because of (a) a legitimate but immensely compensated minister is excluding hundreds of thousands of income from taxes and living in a multi-million dollar mansion, or (b) we are in the courts defending the tax break from being taken away.

Recent news concerns the latter, the oral arguments having been heard by the 7th U.S. Circuit Court of Appeals. Last year a federal district judge in Wisconsin ruled unconstitutional part of the tax code that provides the clergy housing allowance.

Associated Baptist Press has a good story, Court hears challenge to clergy housing allowance. Baptist Press has an optimistic piece here.

The salient point is that if allowed to stand, especially if it makes it to the Supreme Court, minister's who live or rent in homes not owned by churches will lose the ability to exclude income on that basis.

I have always benefited from the HA. I don't think it to be an establishment of religion and thereby unconstitutional. I hope the appeals court overturns the district judge's decision.

That said, the arguments made to the appeals court are interesting and informative. I note the following:


  • The original plaintiffs, the Freedom From Religion Foundation, note that most of the arguments made by the groups supporting the HA are economic - if taken away many ministers will face economic hardship. Give the FFRA credit for seeing clearly here. 
  • Some of the arguments supporting the HA are rather weak. For example, the HA equalizes different religious traditions in this respect, that is, traditions that allow ministers to buy their own housing are not penalized thereby in comparison to traditions (Roman Catholic for one) where the church owns housing. I don't see this a particularly compelling.
  • Another weak argument is that ministers who own their houses have upon them certain expectations that require them to use their domicile for certain church purposes. Well, some do. Some don't. It should be noted here that those who live in parsonages receive the HA under a provision not threatened. Most of us know that living in a church-owned pastorium, almost always next to or near the church, places many duties that are at the "convenience of the employer." That's why most of us celebrate when churches move away from pastoriums to paying a cash housing allowance. I own my house. The church has no claim on it even though I am a hospitable guy and am happy to have church groups out. I am not compelled to do this.
  • Churches get special treatment not by the government's largess but in order to reduce the entanglement of church and state. This is a persuasive point, in my view. Imagine some bureaucrat making a determination about your housing allowance. No thanks.
The whole thing can get quite complicated. I'm only giving the executive abstract for busy clergy.

My clergy colleagues should take the stance that the cash housing allowance is a tax break. Thank you, Uncle Sam. We have ours. You have yours. If there's a move to close all the breaks and loopholes, we will be happy to be part of that conversation.

We should also make the admission that in some small number of cases the Housing Allowance is unethical, unfair, and abhorrent. Million dollar Minister lives tax free in mansion while Average Wage Willie pays taxes on all of his. Phooey. If a pastor or ministry leader receives millions in clergy income, he or she doesn't need a tax provision that excludes potentially hundreds of thousands. Our SBC Ethics and Religious Liberty Commission should wake up and at least make an honest examination of how ethical and fair it is to have examples of this among us. 

There's no telling where this will go, how long or how far, but Plodder will predict that the decision will be overturned, probably because of some legal arcana about standing.










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