Posted on 10/10/2017 6:26:00 PM PDT by marshmallow
A housing benefit that saves clergy $800 million a year in taxes has been deemed unconstitutional by a federal judge. Under the law, housing allowances paid as part of clergy salary can be subtracted from their taxable income. Religious freedom advocates fear the ruling could force many churches in poor areas to close.
MADISON, Wisconsin - A federal judge in Wisconsin has struck down as unconstitutional a law that gives clergy tax-free housing allowances, in a ruling that could have far-reaching ramifications for religious leaders, who could be facing new taxes which will threaten their ministry.
Under the federal law passed in 1954, a “minister of the gospel” doesn’t pay income taxes on compensation that is designated part of a housing allowance. The Freedom From Religion Foundation, based in Madison, argued that the law discriminates against secular employees.
The benefit saves clergy, including non-Christian religious leaders, $800 million a year in taxes, according to the latest estimate from the congressional Joint Committee on Taxation.
Under the law, housing allowances paid as part of clergy salary can be subtracted from their taxable income.
“This tax provision ensures that faith leaders like South Side, Chicago-based pastor Chris Butler receive the same tax treatment as other employees who must live in the communities they serve-like military service members, teachers, and overseas workers,” Becket - a non-profit religious liberty law firm - said in a press released.
(Excerpt) Read more at cruxnow.com ...
If they take a mortgage deduction like most Americans, wouldn’t seem to be much of a difference.
You should base your views on the principle of the right to religious freedom, limited government and the dangers of a tyrannical government who uses the strong arm of the IRS to enfore its will and not on your feelings about liberal Catholics of today. Orthodoxy will survive like Our Lord said.
Stick our Founding Fathers’ principles and what’s right!
It’s actually a double deduction. Housing costs are excluded from income AND housing interest can be deducted. It’s a great benefit for low-paid ordained religious workers, especially young ones with families.
FFRF is begging for it. Let’s pray for them to get everything they deserve in spades.
Yes, I know a few who did, and they ultimately regretted it because they were unable to save up much for retirement on their own.
Many ministers (who really need the benefit of the tax-free housing allowance) make pennies, and they usually have fairly large families, and they are very generous with the little bit of money they do have. I’m sure abuses occur— such as some TV minister getting a huge housing allowance and taking advantage of the tax-benefit that was meant to help underpaid clergy that are truly sacrificing.
I hope the ruling is reversed; or, if the IRS decides to revisit this law, perhaps it would be fair to put a cap/limit on total compensation and housing allowance eligibility.
It’s not just the housing that they don’t pay taxes on, but often the lower rate that they in turn end up paying on that part of their tax that isn’t exempt. So the numbers you quote are deceptively low in terms of actual income received.
I think we might have fewer clergy voting and preaching as liberation theologists if they weren’t in effect subsidized heavily by the government. Either way, however, it is hard to justify the employees of religious organizations getting preferential tax treatment—even if the churches themselves are tax deductible (which always seemed off to me as a benefit in its own right).
Doesn’t matter, churches and clergy are exempt.
quote-
I’m sure abuses occur— such as some TV minister getting a huge housing allowance and taking advantage of the tax-benefit that was meant to help underpaid clergy that are truly sacrificing.
I actually saw the books of a ministry once.
The housing allowances were in the tens of thousands of dollars..
some close to 6 digits.
That was just the housing allowances.
Not surpised to see dads, moms, kids in that kind of ‘family business’.
For some, it might pay really well.
Madison, WI...the Cambridge, MA and Berkeley, CA city of the midwest.
“It’s not just the housing that they don’t pay taxes on, but often the lower rate that they in turn end up paying on that part of their tax that isn’t exempt.”
That is no different than just like the “lower rate” any taxpayer with deductions gets to after the deductions are taken.
Actually, with the average salaries so low and depending on their actual housing costs, many ministers are no different than the average taxpayer - taking the standard deduction, which is generous, instead of itemizing deductions.
Salaries are so low because they get their housing “free”. And if they are given housing they are less likely to have a mortgage, which is the reason most people itemize.
Yes, others with deductions get a “lower rate”, but this is a massive deduction and the impact is indeed for them to pay lower taxes on the rest of their income as well as no taxes on their housing income.
Salaries are so low because they get their housing “free”.
Their housing in most cases today is not “free”. Most protestant Christian churches no longer provide a church owned “parsonage” for the minister to live in. Ministers buy or rent a home. The housing allowance is only whatever the congregation agrees to provide.
Okay, then ministers get double whopping deductions—mortgage AND housing.
No matter, it should all be taxed just like everyone else’s income—housing allowance or otherwise.
You imply that the housing allowance a congregation gives to a minister is “equal” to the full cost of the mortgage, but there is no evidence of that, one way or the other. It is totally up to the congregation. And, the MINISTER does pay FICA taxes on any housing allowance received as well as on any cash salary.
While I am not saying anything to necessarily support continuing to give ministers the housing allowance deduction, but do feel the need to clarify misunderstandings about it. Like some of yours.
I imagine Congress might do something to counter the court’s ruling. The churches, including organizations of most all the Christians and Jewish churches, have some large lobbying organizations in which they are acting together lobbying Congress to help protect their and their employees interest in the tax code.
No, I really didn’t imply that at all. And I think it is irrelevant. There is no reason for ministers to be treated differently than other employees when it comes to tax code. Period.
And I don’t have any misunderstandings—you seem to have some challenges in reading comprehension.
(And hey, if I benefited from such a huge tax deduction I’d probably talk myself into reasons to defend it too.)
I believe there is a concern that churches are using these allowances as part of the salary but taking advantage of the tax free status.
Churches are easily racket-able. You’d be surprised how many “churches” exist simply to soak up Social Justice and political campaign money.
Congress gives all sorts of tax breaks. Someone who gives to a “green” company might get a tax break that doesn’t go to someone who does not. Build a building in one location and you get a tax break. Build it 1/2 mile away and you will not. Families get HUGE tax breaks compared to single people. Tax breaks for college students. For those with kids in child care. Huge bonuses - not refunds, but additional money added on - for lower-income working people. But only if they meet certain age requirements, and the rewards are vastly greater for a married couple with kids. And of course, those with more income are taxed vastly different from those with less.
Part of the basic theory of tax law is that all your money belongs to the government unless the government decides not to take it, and that the government can allow anyone to keep more of it if the government feels it is beneficial.
I doubt this decision will stand.
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