Will Liberal Ministers Challenge Their Own Tax Loophole ?

[cbayer]

http://www.forbes.com/sites/peterjreilly/2013/01/05/will-liberal-ministers-challenge-their-own-tax-loophole/


The version of the flaming chalice currently used as the logo of the Unitarian Universalist Association. (Photo credit: Wikipedia)

Peter J Reilly, Contributor
I focus on the tax issues of individuals, businesses & more
1/05/2013 @ 5:44PM

A tightly focused petition has cleared the first hurdle on the White House We The People site. The petition calls for the repeal of Section 107 of the Internal Revenue Code. Section 107 provides that housing or a cash allowance in lieu of housing received by “ministers of the gospel” is excluded from taxable income. The Freedom From Religion Foundation has a challenge to the constitutionality of the housing allowance. If you are, like me, not much of a constitutional purist, you might find the most disturbing thing about the housing allowance the fact that, unlike the similar military benefit, there is no dollar limit to the clergy housing allowance. The Reverend William Thornton, who has modestly benefited from the allowance, states the problem quite eloquently:

Someone make the case that Joe Sixpack has to pay taxes on his income and doesn’t get any exclusion for his singlewide complete with a deck and a mangy dog sleeping under it, while Kenneth and Gloria Copeland live in an 18,280 square-foot lakefront parsonage on 25 acres valued at $6.2 million and exclude hundreds of thousands of dollars from income taxes under the housing allowance.

Reverend Thornton is a Southern Baptist, which is probably the denomination with the most at stake in the controversy. It is the second largest denomination in terms of number of members but by far the largest in terms of clergy serving congregations and number of churches. Thus it has many small congregations where a couple of thousand bucks to the preacher could make a big difference in viability. Southern Baptists also have a goodly share of the mega-churches, where out-sized housing allowances might seem a bit scandalous to some. There is a problem about the housing allowance that Southern Baptists might not have, though.

A friend of mine, a fellow CPA, is a very devout evangelical Christian. We have a great time with one another while the other guys are talking about how the Patriots are doing. When I talk to him about the clergy housing allowance being not such a hot idea, he explains to me why it is not problem. Society should be supporting those godly men. We are a Christian country after all. We then move onto me asking me why Christians are so enthusiastic about Ayn Rand, while everybody else shifts to the Red Sox and the Celtics.

more at link

[muriel_volestrangler]

1. Tax them all

Have you seen how much the UUA, a liberal congregation that I've have expected to have a bit of decency, thinks its ministers should be paid?

$66K for a small parish, $148K for a large one. http://www.uua.org/documents/mpl/finances/geoindex7.pdf

Compared to the Church of England:

Experienced vicars working in larger parishes earn between £20,000 and £28,000 per annum http://www.myjobsearch.com/careers/vicar.html

A bishop - that only a few get to, after many years, in charge of a considerable organisation, gets about £40K - http://www.guardian.co.uk/uk/2011/sep/21/welsh-bishops-forgo-pay-rise .

[cbayer]

2. I think, but am not sure, that the perks and benefits provided by the CoE may even much of

that out.

This is a complicated area, with some ministers/pastors being hugely overcompensated and others living on subsistence wages.

I think some review of the tax laws is in order at this point to level out the playing field, but I would never support a "tax them all" reactionary approach such as you suggest.

[muriel_volestrangler]

3. The CofE vicar would need accommodation worth $100K a year to even that up

and no, they don't get that. Why is "tax them all" 'reactionary'? We all get taxed. We tax teachers, who have an obvious benefit to the community. We tax social workers. We tax counsellors. We tax marriage registrars. None of them get tax free accommodation. Why are minister of religion an exception? Because they have political power, and are surprisingly greedy. Those UUA figures have really shocked me.

[cbayer]

4. Well, I can give you one person's perspective.

I grew up the child of a minister, as you know. We had enough but not a lot of money. We had no health insurance, significant retirement plan. We did have housing - sufficient, but by no means fancy. Our home was frequently an extension of the church, accommodating meetings, social events, people in crisis, and even negotiations between local rival gangs. We traveled once a year by car and went camping. My father worked his butt off and was on call 24/7, and worked particularly hard on the days that others got off. My mother, as minister's wife, also had what many would consider a full time job. And we paid income taxes just like everyone else.

My father's salary was highly dependent on what people gave to the church. And the church was highly involved in providing support, comfort and funds to those most in need. I was involved with many families like my own and all lived on very little.

Again, while I feel some review and revision is in order right now, these blanket statements like "Tax them all" don't take everything into consideration and could potentially present significant 1st amendment violations. They also don't take into consideration the things that many churches do that secular and governmental agencies fail to do and the impact it would have on the most needy among us.

Perhaps things are different in England, where there is much less diversity when it comes to religion.

[muriel_volestrangler]

5. it doesn't sound like your father was on the equivalent of $150K a year

Yes, the ministers I have known have had a lifestyle roughly like yours - and that comes from a salary far below $150K. But there should be a principle here - if people want to voluntarily band together to pay someone to give them a service, the tax situation for their pay should be the same, whether they're involved in a religion or not - like, say, a teacher at a private school. I don't think there would be a 1st amendment problem - taxing compensation supplied in the form of accommodation does not hinder the practice of religion in any way (the precedent of taxing the monetary part of the salary is already set), and it does not single out religion for special treatment, so it is not establishing any religion either.

[cbayer]

6. I think the only major distinction is about housing, which you and this article address.

I have mixed feelings about that, but, in general, would have preferred to have had a home which was more ours and less the community's. That would have required some increase in salary, which I am not sure was an option, but I don't really know the details.

But, in light of some of the flagrant abuses of the current laws, I am generally in favor of leveling the playing field.