The Favored Pew

Via the Wall Street Journal:

As Congress scrutinizes every nook and cranny of the budget for possible revenue, a surprising court decision is allowing clergy members to buy or live in multiple homes tax-free. The U.S. Tax Court ruled that Phil Driscoll, an ordained minister and Grammy Award-winning trumpeter who went to prison for tax evasion, didn’t owe federal income taxes on $408,638 provided to him by his ministry to buy a second home on a lake near Cleveland, Tenn.

Under a provision of the tax code known as the parsonage allowance, first passed in 1921, an ordained clergy member may live tax-free in a home owned by his or her religious organization or receive a tax-free annual payment to buy or rent a home if the congregation approves. The Tax Court ruling, made final in March, extends the parsonage allowance to an unlimited number of homes, which may be owned either by the religious organization or the clergy member.

In a 7-6 ruling, a panel of Tax Court judges sided with Mr. Driscoll’s argument that the word “home” is equivalent to “homes,” just as “child” is interpreted to mean “children” elsewhere in the tax code. The Internal Revenue Service declined to comment on the decision. In May, the agency appealed it to a federal appeals court in Atlanta. Experts say the parsonage allowance was originally included as a way to minimize taxes on clergy members, whose compensation was often meager. It still is widely used for that purpose, church officials said, although the IRS doesn’t track usage of the benefit.

“For most of them the housing allowance is modest because their compensation is modest,” says Daniel Gary, an attorney with the United Methodist Church in Nashville.

Similarly, D. August Boto, general counsel of the Executive Committee of the Southern Baptist Convention, says for leaders of the organization’s 46,000 churches “the housing allowance is critically important for making ends meet—it is not a luxury.”

However, some experts are concerned that the new ruling opens the door for the allowance to be applied to multiple homes used by leaders of wealthier ministries…

You don’t say.

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4 Responses to The Favored Pew

  1. Jay says:

    Interesting how these clergy have no problems with taking our money and redistributing it as they see fit. They seem to have skimmed past the various injunctions against theft in their Big Book of Rules.

    As it stands, we don’t even have the levers of democracy that would be available to us if this was a government program. “No taxation without representation” was a rallying cry at the inception of this nation, yet cowed legislators enshrined this shakedown right into our tax code.

    Normalize the tax code. Tax these businesses alike with every other — and lower the rates accordingly.

  2. Easy fix: Congress just needs to clarify that “home” is a singular and not a plural noun.

    Crisis averted.

  3. Mark – that still wouldn’t fix the problem. Why should a minister get one home tax-free?

    The Grover Norquist pledge requires signees to support this nonsense. So another upside of normalizing the tax code is that Norquist’s pledge would be much more consistent with common sense than it currently is.

  4. Polichinello says:

    The Phil Driscolls and Jimmy Swaggarts are easy Elmer Gantry targets, but they really aren’t representative of how most priests and pastors live. A majority of them have serious degrees and certificates in counseling, and they could make a very comfortable living doing something else. Instead, they literally put themselves on 24-hour call to show up at hospitals, funeral homes and domestic quarrels. How would you like to receive a call at 3 a.m. on a cold, rainy night because a boy you’ve known since he was born has been fatally injured in a car wreck and needs last rites and his family needs comforting and help with funeral arrangements. Any volunteers for that task? I haven’t got the salt for it myself. If you do, my congratulations.

    Other times they’re at the hospital when a parishioner dies, and they get the delightful task of informing the family. Anyone want to do that for a living?

    In addition to this emotionally wrenching stuff, they have to officiate and manage a community center that not only has Sunday services, but extra services and often teaches offers the only kind of serious cultural educations kids get–you know, about half the stuff Shakespeare and every significant writer before and after him alludes to in their work. And, of course, they have to negotiate reams of government regulation that comes with any building facility. Sometimes you get a good congregation that pitches in, but the pastor still has to oversee this sort of thing.

    The priest at my wife’s Orthodox church makes about $47,000/yr. His wife has to work as his assistant. Sometimes wives get outside work, but it’s never substantial, because they can be transferred fairly quickly. This man could easily find work in the business world at twice that salary.

    Given a suitable comprehensive tax reform, I wouldn’t mind doing away with this tax benefit, but given all the breaks we give to real rent-seekers, like the whole ethanol industry, it’s hard to get worked up about a rather small break we give to people who perform a number of valuable public services that the government really just can’t fill.

    So, yeah, for now, I agree with Mark. Close the loophole by using more limiting language.

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