Our sacred tax break: Clergy Housing Allowance

[William Thornton]

New topic to go along with Bruce's "Kudos to William..." in this forum:

My view on the clergy housing allowance is that it is a welcome tax break for ministers but one that is viewed by the public only when abuses are publicized. These abuses contribute to the pressure to revise or eliminate it. I would much rather revise it than eliminate it.

is my article up today. There are a number of links that feature some of the things written and said about it, along with examples of egregious abuse.

The abuses come because (a) the amount of the tax break is unlimited. If a minister lives in a $3 million home he can cut hundreds of thousands of dollars from his adjusted gross income and not have to pay income taxes for that amount, a savings of tens, possibly hundreds of thousands in income tax payments. Ordinary citizens are indirectly subsidizing the minister's mansion. (b) In some situations questionable individuals employed by churches or church institutions have been ordained as ministers to claim the HA. This is a more prickly area for government to enter, since we don't want some bureaucrat empowered to determine who is a legitimate minister and who is not.

No one said the gummit had to make sense with tax policy but a more sensible approach to giving ministers a tax break would probably be better for us in the long haul.

I take Bruce's point about the change in attitude from us on the state's involvement with affairs of the church. We tend to like the involvement so long as it favors and rewards us.

Having blogged a bit on this subject, it looks to me as if Southern Baptists take the approach of tiptoeing around any substantive discussions of the matter in hopes that no one will notice and things will just go on as they have for about a century...and we can just continue to take the tax break.

[Tim Bonney]

William. I'd be willing to forgo the housing allowance tax break if I didn't have to pay both parts of SSI. I have never understood why the IRS considers me an employee for tax purposes but self-employed for SSI. I'm not or ever have been self-employed as clergy. When I was a Baptist any church I worked for could fire me. As a United Methodist the Bishop could fire me. As far as I'm concerned that makes me an employee.

(I reposted this from the Kudos thread.)

[William Thornton]

[Tim Bonney]

[Neil Heath]

I'm wondering if the housing allowance was created in part to equalize the variation in housing provided for clergy. Some got a house, others just a salary, and not necessarily a salary that covered the difference.

[William Thornton]

[Tim Bonney]

[Dave Roberts]

The whole issue of minister tax status doesn't make a lot of sense. I have also paid for exhorbitant rental values in one church where I lived in a parsonage. Churches can provide Social Security offsets to cover the normal church share, but that also becomes taxable income. The original idea for the self-employment status is that there was not the political will to impose payroll taxes on churches for ordained employees. It was simply the avoidance of things the Congress did not want to address.

[Tim Bonney]