If this ruling holds up, it is going to send shock waves through most LCMS congregations and across our clergy roster.
Also, see my posts at 12, 13, 16, and 17.
Posted on 11/23/2013 7:35:07 AM PST by PAR35
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.
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.
(Excerpt) Read more at host.madison.com ...
good. this has been abused for too long. I know plenty of “pastors” who claim to be “pastors” so they can deduct their entire mortgage. I bet you do too. Jessie Jackson for one.
Now, the daughter is also going to try the trick..
The downside is that these types of laws were the basis for military housing allowances being tax free (at least back in the dark ages when I served).
Given 0bama's hatred of the military, I can see him going after the troops.
This is going to be a mess. The exemption is there to put clergy who pay for their own residences on par with those who live in parish property for free, or priests who live in Church facilities.
Clergy who live in parish or Church property may be next.
I know that some of these housing allowances I saw on some books were in the thousands ..not a bad gig.. like 50 of those thousands for housing. not including a salary..... sounds like a rather large loophole for tax evasion... nice religious folks earning over six figures for their lord...hallelujah...some atheists and believers could live off those housing allowances alone.. preaching some gospels is good business.....
As a former church board member I have seen the numbers and they can be significant in some areas. Our church in the DC suburbs of Maryland does not have a parsonage. The minister tells the church how much of pay to designate for housing. The minister uses that amount to pay mortgage or rent. I don’t know how it works for clergy who own their homes outright.
Eliminate all exemptions for all income, reduce the tax code to a simple percent of gross income and be done with it. If that won’t work, (and it won’t) then eliminate income tax completely, especially the unfair graduated silliness we now endure; institute a flat federal tax based on the GNP. If that won’t work, (and it won’t) shutter everything federal except National defense, Dept of State, etc as outlined in the US Constitution. Remind the feds that everything else not granted to the fed/national gov is the responsibility of the states or the people themselves. How radical.
Atheists in Madison strike again!
FReep Mail me if you want on, or off, this Wisconsin interest ping list.
There was a time and a place for it. When Pastors lacked enough compensation to live on because the church was too poor to pay enough. But, today? Still possible, of course, as I know some who have tiny churches. However, when you think about the average church, they should do their best to pay the pastor a living salary, or allow time for him to hold a part-time job. Think of Paul. Anyway, there is much abuse these days and probably a good reason to do away with it to prevent fraud. Obviously, these people who perpetrate the fraud have no conscience to be pricked with their duplicity. Sorry state that is!
In 2010 Judge Barbara Crabb sided with the atheists (and against the Family Research Council) that the National Day of Prayer is unconsitutional.
That is an understatement. As a PPP (Poorly Paid Pastor) myself, and for many of the pastors I know, this will be a severe blow financially. Most pastors in my Lutheran Church-Missouri Synod are significantly underpaid as it is, and this now will add to our distress. Thanks, Obama!
Exactly. This was a way of equalizing things for those pastors who do not live in a parsonage.
I was recently treasurer of our temple, and the parsonage allowance was a part of the Rabbi’s contract. He owns his home, and probably has a mortgage. I just read that the exemption has, prior to this ruling, been limited to the rental value of the property. That was the IRS position, but a 2000 tax court ruling did not recognize that limitation.
I suspect that this new ruling opens the door for litigation to define the “convenience of the congregation (employer)” for determining the exemption of the rental value of the parsonage.
I agree, but it won’t happen. congressthings enjoy too much wining and dining by lobbyists seeking advantages for their clients.
Still COMMON, perhaps now more than ever! Many congregations are struggling financially, and quite often they balance their budget on the back of the pastor: slashing his salary, downgrading his health insurance, etc. This has happened to me, and to lots and lots of my fellow pastors.
The abuses you mention are not common. I know that in my Lutheran Church-Missouri Synod, the vast, vast majority of my fellow pastors are NOT getting rich, and they are NOT abusing the housing allowance. Most of us are way underpaid, relative to our education, and overall the salaries and benefits are getting worse.
If this ruling holds up, it is going to send shock waves through most LCMS congregations and across our clergy roster.
Also, see my posts at 12, 13, 16, and 17.
I’ll say right off the top that I advocate a flat tax structure. One with a zero bracket for all who have modest earnings, and a moderate tax rate on all earnings above that. Picking and choosing what income (or non-cash benefit) to exempt from taxes not only results in a larger tax burden on those who do pay taxes, it corrupts taxation by encouraging special interest groups to lobby for tax exemptions, and to make campaign contributions and so forth. In the end, the value of the exemptions is dissipated in influencing the tax structure. Its a fools game. It how the politicians pit us against us. “Remember who the real enemy is.”
As I understand the article, this is a ruling by a FEDERAL judge and thus will affect churches and clergy across the country and not just in Wisconsin.
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