Should the government pay
part of minister’s salary?
What do you think of
ministers getting part of our pay from the state? It’s an old idea that has
been common in
Of course there is no bill before Congress; the
government already supports ministers in the
But the secret’s out, thanks to a major spread
in the New
York Times this week. In a front
page business story they spilled the beans: Ministers and church businesses get
lots of tax breaks. Rick Warren’s suit
to get his over-the-actual-rental-value housing allowance approved was the big
story. But they did a tell-all on all
the other breaks churches and semi-religious businesses get too.
Let’s remind ourselves of
the breaks:
- We ministers are exempt
from income taxes on our free use of a parsonage or on the housing
allowance we use to provide our own house.
- We ministers are
allowed a special option to drop out of Social Security if we claim we
have a religious objection to
all such government insurance programs.
- In some states
religious businesses (publishing, child care etc.) pay no taxes even if
they compete with private enterprise business that does pay these taxes.
There
are other breaks but these are the main three.
And, (as you would expect) the New York Times was not particularly
generous to ministers in their article, especially high paid ones. The implication is there is a giant tax
loophole ministers get that inner city poverty workers and teachers who also
contribute to society don’t get. Of
course some others do get the “parsonage” benefit, namely US diplomats and the
military. But both of these actually do work for the government so the
implication of the article was that ministers are getting a giant $500 million tax
break.
So
a little history:
- We’ve gotten this tax
break on housing since 1954.
- In 1971 the housing
break was limited to the “fair market value” of the house plus utilities making
it out of bounds for a [rich] minister to get their whole $150,000 salary
designated as housing then pay almost the whole lump sum on a million
dollar mansion each year while they live on other money. (This actually happens.)
- When Rick warren fought
this limitation in tax court he won in May of 2000. But the IRS appealed. On appeal a new
question arose—is the tax break constitutional at all, even the little one
we all take (this is still an open question).
- Congress hastening to
please us ministers by quickly passing a law “The Clergy Housing
Clarification Act of 2002” which affirmed the housing allowance but sided against
Rick and went with the old rule—limiting our allowance to the “fair market
value plus utilities” in the future. So that is where we are now—back to
where we were before Rick went to war.
However, our housing tax
break is not safe forever. By exposing to the masses
these breaks the New York Times may have ignited closer examination. Few citizens really care if ministers making $40,000
get a break like this. But when some ministers on TV are getting this break
while earning $500,000 a year and live in million dollar mansions they start to
feel ripped off. As always the abuses of tax law creates an atmosphere calling
for “tax reform” that often hurts the little guy while repairing the loopholes
for the big guys.
I don’t have a strong personal
position on this tax break (though I take all the breaks the IRS allows me). However since it is in the news I wanted to
bring it up for discussion this week.
Here are a few thoughts to prompt our discussion:
- Is this tax break a
remnant of “old Christendom” where most everyone (including people who
don’t attend church) considered themselves “Christian” and supporting
ministers through the tax code just made sense?
- When a church operates a
business competing with private enterprise should the church pay taxes on their
business?
- Should there be a “cap”
on housing allowance eliminating a minister from using their allowance to
purchase multi-million dollar homes tax free (then sell the house a five
years later tax-free from capital gains)?
- Should our housing
benefit be extended to other people who serve society at low pay—inner
city workers, aid workers, para-church workers
and non-ministerial missionaries? To
all people?
- If we lose the
minister’s housing benefit how will the government tax priests who have
taken a vow of poverty and have no income—how will they pay taxes on a
church-owned manse with church-owned furniture?
- To be a “minister” and
get these benefits the IRS says a clergy person must 1) Administer
sacraments; 2) Conduct worship and
3) Direct the spiritual life of the congregation (plus some other factors) is it OK with us for
the IRS to decide what a legitimate “sacrament” is?
- Switching from taxes to
tithe, since we expect lay people to pay their tithe on money they spend
for housing should ministers pay tithe on the value of their
parsonage/housing allowance?
- Should Moslem religious
leaders get this benefit too?
Should it be given to the priests of Wicca, the various
Devil-worshipping religions the cults?
Or should the government decide which religions are valid ones and
which aren’t?
- Is tax law in and of
itself always “unfair” and thus the rich, Congressional representatives,
single people, farmers and ministers alike get benefits and this business
is in the category of “get whatever we can” and thus we should fight to
keep whatever we can even if it looks unfair?
- Is opting out of Social
Security an honest act (3 of 10 ministers do) when we must swear that we are
opposed to all government sponsored insurances and support programs?
As for me I like not having
to pay taxes on
a chunk of my salary every year. I hope
they keep the loophole for my personal benefit.
However I confess that when I pay my (greatly reduced) taxes I always
fell like it is “un fair” even though it is legal and I do it anyway.
So what do you think?
The discussion is open for a few weeks after this article is posted.
Click
here to comment or read comments for the first few weeks after this posting
Keith Drury