taxes

Tax-free housing for ministers unconstitutional? Chicago Tribune has the newsy scoop

Tax-free housing for ministers unconstitutional? Chicago Tribune has the newsy scoop

If you're like me, you may not be real familiar with the clergy housing allowance.

However, my minister friends assure me the allowance — a U.S. tax break — is a big, big deal.

Elimination of it would "significantly increase the tax burden, and hence, diminish the spendable income, of ministers everywhere," Dallas preacher Gordon Dabbs told me. "If and when it goes away, I would expect to see staff cuts at some churches and, almost certainly, some choosing to leave full-time (paid) ministry as it will no longer be financially viable for their families."

Why do I bring this up now? Because the housing allowance is facing a federal court challenge, as Chicago Tribune religion writer Manya Brachear Pashman highlighted in a meaty story earlier this week:

Chicago clergy are fighting a federal judge’s recent ruling that tax-free housing allowances for clergy violate the separation of church and state.
The 7th Circuit Court of Appeals in Chicago will be asked to weigh in on the challenge to the so-called parsonage allowance — an Internal Revenue Service benefit that allows clergy to exclude from their tax returns the compensation earmarked for mortgage payments, rent, utility bills or maintenance costs.
The ministerial tax break has been on the books for more than 60 years and is cited by many houses of worship, particularly smaller, independent ones, as an important financial underpinning to carrying out their mission.
But it has become the latest target of the Freedom From Religion Foundation, a self-proclaimed guardian of church-state separation based in Madison, Wis., that challenged the tax break, and won, in a Wisconsin court.
“This is a huge privilege and benefit for churches because tax-free dollars go further,” said Annie Laurie Gaylor, co-president of the Freedom From Religion Foundation. “They have been allowed to pay lower salaries when it’s all taxpayer subsidies. Clergy pay less, and everyone else pays more.”
Chicago-area clergy say an end to the tax-free housing allowance would drastically reduce their take-home pay, limit how close they can live to their houses of worship and impede their ministries, which often offer safety nets for the communities they serve.
“The housing allowance makes all the sense in the world,” said the Rev. Chris Butler, pastor of Chicago Embassy Church, a small Pentecostal congregation on the South Side, who plans to appeal. “If I’m looking to be God’s pastor to this community and be available to folks inside and outside the congregation, in a city like Chicago, whether I’m doing that as a pastor or an imam or the head of a nonprofit organization, it makes all the sense in the world that I live in that community. In a lot of these kinds of organizations, my church included, we’re not making the world’s biggest salary. This allowance is so important.”

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Taxing theology? Washington Post does pretty solid reporting on exemptions for big Utah families

Taxing theology? Washington Post does pretty solid reporting on exemptions for big Utah families

In journalism, sometimes it takes an outsider to provide an inside look at a community, such as the one I reside in and commute through daily.

Today's example is a Washington Post story about the uncertain impact of pending tax reform legislation, headlined in part: "In land of large families, deep uncertainty over impact of tax overhaul." (The original URL for the story inserts the word "Utah," followed by a comma, between "in" and "land.")

Let's drop in on the story, shall we? The key: How did these political-beat reporters handle the religion details in this topic?

AMERICAN FORK, Utah -- This is how Becca Riding, mother of five, thinks about the tax changes speeding through Congress: Will she and her husband still be able to pay swim team fees for Emily, 13, and Caleb, 11? Will Ainsley, 9, be able to go back to the week-long science summer camp she loved? Can their family still go camping once a year in a national park? And will it remain as affordable to give 10 percent of their income to the Mormon Church, as their faith prescribes?
Middle-class families like the Ridings have been at the center of the Republican message about why the party needs to pass a massive overhaul of the nation’s tax code. The Senate’s top tax writer, Utah’s Orrin G. Hatch (R), pledged that the legislation would bring relief to “hard-working American families and small businesses in Utah and around the country.” President Trump surrounded himself with families at the White House as he urged lawmakers to pass the bill.
But days before Congress plans to pass the biggest tax overhaul in three decades, the Ridings and other middle-class families are still seeking basic answers about the plan and how it will affect not just their pocketbooks but their everyday lives.

I currently have a day job in Lindon, Utah, a few miles south of American Fork, through which I pass morning and evening. (If someone throws a hubcap on the I-15 there during the afternoon rush, watch out.)

So I have some first-hand knowledge of the area and the community. The landscape is dotted with chapels and other facilities related to The Church of Jesus Christ of Latter-day Saints -- generally one "ward," or congregation, for every 400 families. There's an LDS temple in American Fork, as seen in the image at the top of this post (Rick Willoughby via Wikimedia Commons). As with much of Utah County, immediately south of Salt Lake County, the area is heavily Mormon.

Not that there's anything wrong with that, mind you.

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An old-now-new question: Should churches and other religious non-profits be tax-exempt?

An old-now-new question: Should churches and other religious non-profits be tax-exempt?

RACHAEL’S QUESTION:

Once in a while I’ll see someone comment online about how taxing churches could help with some of the nation’s financial problems. Would taxing churches help or hurt? How do other countries handle their churches and taxes?

THE RELIGION GUY’S ANSWER:

Governments always want more cash. However, a unanimous U.S. Supreme Court warned in 1819 (in McCulloch v. Maryland) that “the power to tax involves the power to destroy,” so policy-makers need to weigh societal benefits churches provide, often not available otherwise (more on this below).

Those are political and economic calculations. But there’s the far more fundamental issue of fairness.

The United States has always recognized the natural and inherent right to exemption for groups that operate on a not-for-profit basis, whether schools, hospitals, and secular charities or -- treated equally -- churches (or synagogues, mosques, ashrams) and religious charities and organizations.

However, a 2016 report from the U.S. Commission on Civil Rights stated that all sorts of religious exemptions should be designed “narrowly” so they do not “unduly burden non-discrimination laws and policies” for instance on gay matters. (Religious groups through history have hired employees who share their beliefs and moral tenets.) Weeks after that, a petition from Christian conservatives declared that tactics such as removal of tax exemption due to gay and transgender policies “threaten basic freedoms of religion, conscience, speech, and association.”

One reason for such concerns was the oral arguments prior to the Supreme Court’s Obergefell v. Hodges ruling that legalized same-sex marriage nationwide.

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Your weekend think piece: Is it time to allow governments to define 'real' religion?

Your weekend think piece: Is it time to allow governments to define 'real' religion?

Back when I was doing my master's degree in church-state studies -- during an earlier era at Baylor's J.M. Dawson Institute -- one of the hot questions was this: Legally speaking, what is a "religion" and who gets to define what is and what is not a religion?

It's an old question and there are no signs that it's going away. Take, for example, those online services that will ordain you as a minister. Does a piece of paper from such an operation mean that you have the legal protections provided to clergy? How about your tax status?

You can see related questions surface in debates about, oh, the First Church of Cannabis. Is smoking weed and seeking enlightenment a tax-exempt, protected faith activity? Well, what if the people making this drug-related claim are Native Americans and the tradition goes back for centuries?

More? How about the status of Scientology in Germany?

So how do you know you are dealing with a fake or warped religious group? What was drummed into us, in our texts and lectures, was a threefold test stating that governments have every right to investigate religious groups that appear to be linked to (a) fraud, (b) profit or (c) clear threat the life and health.

But state tax officials are going to do what tax officials are going to do, which is look for more revenue.

Back in the 1980s a Colorado official decided that church-based day-care centers were not "religious." What about a non-profit organization that existed to produce books and audio-video materials for use by missionaries? That wasn't "religious," either.

It seemed like old times reading a recent piece at The Atlantic that ran under this epic double-stack headline:

Should Courts Get to Define Religion?

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Does help for communities justify churches’ tax exemption?

(Paraphrased) Secularists challenge tax exemptions for houses of worship, saying this denies valuable revenue to communities that get little or nothing in return. True?

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Taking a legal walk in a church's non-religious woods

For decades, I have been covering stories involving clashes between religious organizations and state and county tax officials. The key plot elements in these legal dramas usually include:

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