In 1954, Congress passed a law giving clergy the right to deduct from their taxable income a portion that was designated as “housing allowance.” There were two reasons for this: first, a recognition that clergy, almost alone among workers in American society, were required to live within a specific geographic area, or even in a specific house, as part of their job. Second, and far more importantly, it was given to balance out the fact that clergy are treated as self-employed (and thus liable for the entire bill) for Social Security purposes to avoid the dilemma of taxing their churches, while being treated as employees for income tax purposes. Now, the Freedom From Religion Foundation has managed to convince a federal judge that clergy should get hosed by the feds from both directions:
This is typical liberal thinking. The number of “mega-church pastors with huge mansions” is incredibly small. But because it excites the jealousy of some religion-hater, it means that hundreds of thousands of families across the country are going to get screwed over.
Gaylor’s remarks, aside from being obviously hostile to religion, also fairly drip with envy. But it’s an envy that is misplaced, because she doesn’t understand the full extent of the tax situation clergy face. Nor does she care to. That would distract from her real purpose, which is to drive religion–and especially Christianity–underground.
A federal judge has found unconstitutional a law that lets clergy members avoid paying income taxes on compensation that is designated part of a housing allowance.That’s exactly right. Here’s the thing: there are lots of tax deductions that are given to just one segment of society, but the FFRF couldn’t care less about those. It’s only the clergy deduction that bakes their biscuits.
The decision Friday by U.S. District Judge Barbara Crabb could have far-reaching financial ramifications for pastors, who currently can use the untaxed income to pay rental housing costs or the costs of home ownership, including mortgage payments and property taxes.
“It’s a really big deal,” said Annie Laurie Gaylor, co-president of the Madison-based Freedom From Religion Foundation, which filed the lawsuit. “A church currently could pay a minister $50,000 but designate $20,000 of it a housing allowance so that only $30,000 would be taxed as salary.”
Crabb acknowledged in her decision that the exemption is a boon to ministers, referencing a 2002 statement by then-U.S. Rep. Jim Ramstad of Minnesota that the tax exemption would save clergy members $2.3 billion in taxes from 2002-2007. But she said the magnitude of the benefit only underscores what’s wrong with the law.Yes, it is, as I noted above. If you’re going to treat clergy differently from the way you’d treat any other employee for Social Security, why is it OK to then give them a different status for income tax? The problem is a combination of the requirements of the First Amendment and the mess that is our tax system, but the judge is treating this as though it is nothing more than an obvious Establishment Clause issue.
The exemption “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,” Crabb wrote.
The defendants in the case are U.S. Treasury Secretary Jacob Lew and acting IRS commissioner Daniel Werfel. Attempts to reach those agencies late Friday were unsuccessful.So the “defendants” in this case are people who have a vested interest in seeing to it that the housing allowance exemption is overturned. Conflict of interest much? And if they “didn’t identify a reason” for the exemption, then it just shows that they had no desire to actually win the case.
Crabb said the defendants did not identify a reason that 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.
Clergy are permitted to use the housing allowance not just for rent or mortgage but also for home improvements such as swimming pools, Gaylor said. They may exempt from taxable income up to the fair market rental value of their home, a measure particularly helpful to well-heeled pastors, she said.Yeah, and guess what? Clergy also do something else that most people don’t have to do, which is pay Social Security–taxed at 15.4%, no deductions allowed–on the fair rental value of their house, even if it is a church-supplied parsonage in which they are building no equity.
“When you’re dealing with some of these mega-church pastors with huge mansions, they can be paid an enormous amount in housing allowances,” Gaylor said.
This is typical liberal thinking. The number of “mega-church pastors with huge mansions” is incredibly small. But because it excites the jealousy of some religion-hater, it means that hundreds of thousands of families across the country are going to get screwed over.
Gaylor’s remarks, aside from being obviously hostile to religion, also fairly drip with envy. But it’s an envy that is misplaced, because she doesn’t understand the full extent of the tax situation clergy face. Nor does she care to. That would distract from her real purpose, which is to drive religion–and especially Christianity–underground.
