Parsonages, paychecks and rendering unto Caesar (2)

Parsonages, paychecks and rendering unto Caesar (2) November 25, 2013

The problem with a clumsy, kludgey mess like the tax structure of clergy compensation isn’t just that it’s inefficient and burdensome. Such systems also tend to become inequitable. Whatever it was they were originally patched together to do, they eventually wind up benefitting those who have mastered the art of exploiting them.

For an example of what that looks like in this case, here’s some background from Sarah Pulliam Bailey for Religion News Service:

The law’s tax exemption has been contested since a decade-old dispute between the IRS and California mega-church pastor Rick Warren. In 2002, the IRS attempted to charge Warren back taxes after he claimed a housing allowance of more than $70,000.

He eventually won the federal court case, and that led Congress to clarify the rules for housing allowances. The allowance is limited to one house, and is restricted to either the fair market rental value of the house or the money actually spent on housing.

Bailey notes that it’s not clear how this clarification of the rules applies to someone like the Rev. Steven Furtick:

The Southern Baptist pastor of one of the nation’s fastest-growing churches is building a 16,000-square-foot gated estate near Charlotte, N.C. The tax value on the 19-acre property owned by Steven Furtick of Elevation Church is estimated to be $1.6 million.

Both Furtick and Warren are Southern Baptist clergy, but neither one is a typical SBC cleric, so the denomination’s Russell Moore isn’t completely wrong when he argues that the housing-allowance exemption is particularly important to “clergy in small congregations of all sorts.” That’s how kludges tend to sort-of work. They become essentially vital to those with the fewest resources, while at the same time becoming extremely lucrative for those with the most resources who have learned to milk them for all they’re worth.

Russell Moore is completely wrong, though, in the full context of his remarks:

The allowance is neutral to all religions. Without it, clergy in small congregations of all sorts would be penalized and harmed.

This is doubly wrong. The allowance may be neutral among religions, but it is not neutral to religion. It privileges religion. The housing-allowance exemption may be available to Christian, Jewish and Muslim clergy alike, but it is not available to computer programmers or to plumbers or to nurses or to violinists. It is a tax advantage provided to clergy. And it is very hard for me to see how such an advantage does not constitute an unconstitutional establishment of religion.

For Moore’s talk of clergy being “penalized and harmed” by the removal of such an advantage to make any sense, then, it would have to be true that anyone not currently able to take advantage of this privilege is, at this very moment, being “penalized and harmed.” If Moore believes his own defense of clerical privilege, in other words, then he’s expressing a cruelly callous indifference toward the “penalty and harm” being suffered by laypeople “in small congregations of all sorts.” Moore is saying, in effect, that all Southern Baptists who are not clergy deserve to be penalized and harmed.

That’s a big screw-you to the pews. I hope he wouldn’t have said that if he’d thought this through. But since he hasn’t thought this through, that’s what he said.

Photo snurched from the website of St. Petri Lutheran Church (ELCA) in Flanagan, Ill.

One of the weirder aspects of this whole business is that the lawsuit challenging the housing-allowance tax privilege for clergy was filed by the Freedom From Religion Foundation. Their suit initially was denied because they lacked standing (legalese for “none of your business, this doesn’t affect you”). So the FRFF started treating its executives as though they were atheist clergy — paying them a housing allowance as well as a salary. The federal government responded by offering to treat these FRFF officers as “ministers of the gospel” — qualifying them for the housing-allowance exemption as well.

The fact that “ministers of the gospel” is the language of this particular tax rule underscores just how shaky the government’s case here is, and why it’s not surprising that U.S. District Judge Barbara Crabb would rule that a special tax privilege exclusively for ministers of the gospel “provides a benefit to religious persons and no one else, even though doing so is not necessary to alleviate a special burden on religious exercise.”

Creating a special sweet deal just for religious people isn’t constitutional, even if you broaden the deal a bit to also include a handful of atheists — magnanimously offering to rechristen them as “ministers of the gospel” too.

So the current system of clergy compensation is unconstitutional. But it’s still the current system of clergy compensation. It may be a kludgey, unconstitutional mess, but that mess is how things operate at the moment. You can’t knock out a bearing wall and then put in the new support beams to replace it. You’ve got to replace it first or you’ll wind up with an even bigger mess when the ceiling falls in.

Here’s some of the big picture of what this means, from Sarah Pulliam Bailey’s piece:

The clergy housing exemption applies to an estimated 44,000 ministers, priests, rabbis, imams and others. If the ruling stands, some clergy members could experience an estimated 5- to 10-percent cut in take-home pay.

… Churches routinely designate a portion of a pastor’s salary as a housing allowance. So, for example, a minister that earns an average of $50,000 may receive another third of income, or $16,000, as a tax-free housing allowance, essentially earning $66,000. Having to pay taxes on the additional $16,000 ($4,000 in this case), would mean a 6-percent cut in salary.

The exemption is worth about $700 million per year, according to the Joint Committee on Taxation’s Estimate of Federal Tax Expenditure.

Bailey’s reference to a “6-percent cut in salary” is misleading. Closing this tax loophole would mean that this hypothetical clergyman’s take-home pay would be 6 percent less that it is with the loophole in place, but that’s not a “cut in salary” — that’s just having to pay taxes just like laypeople do. Their salary isn’t getting cut, the federal tax expenditure being paid to them as a subsidy is being eliminated.

But that subsidy is the current system. Those 44,000 clergy entered into their current employment contracts under the rules of that system. It’s important, then, how we go about transitioning from the old system to the system that will replace it. That transition — if done abruptly or crudely — could end up causing the “penalty and harm” Russell Moore is worried about, even though the new system, in which clergy are in the same boat as the laypeople of their congregation, is in no way unfair or harmful to them.

Think of the home mortgage-interest deduction. That’s a much, much larger annual tax expenditure — $90.8 billion in 2010. It doesn’t violate the First Amendment the way the housing-allowance lagniappe for “ministers of the gospel” does, but one could make all sorts of arguments that this massive wealth transfer to homeowners is unfair, subsidizing property-owners at others’ expense, or that it creates dangerous distortions in the housing market. Yet even if you were utterly opposed to the mortgage-interest deduction, you couldn’t advocate just wiping it away overnight. Millions of people entered into contracts based on the existence of this deduction. Abolishing the mortgage-interest deduction would have the same effect as increasing everyone’s mortgage by something like “5- to 10-percent.”

A system without the mortgage-interest deduction might be more efficient and more fair than the current system, but unless the transition were done carefully, over time, a lot of people could get hurt by that falling ceiling.

Churches and their lawyers will no doubt spring into action to challenge this district court ruling. They will likely spend several years in court, arguing that a tax expenditure that “provides a benefit to religious persons and no one else, even though doing so is not necessary to alleviate a special burden on religious exercise” is somehow constitutional. Maybe they’ll even win — for now.

But those churches and their lawyers should also be hard at work on figuring out what the next system of clergy compensation will look like — the one without this special privilege just for clergy. And they should also be trying to figure out the best way to make a smooth transition from the current system to that new one.

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  • Hmmm. Daniel and Neutrino in a circle snerk. Yuk, yuk, wack, wack.

  • What? OF COURSE you consented. You’re free to stop availing yourself of the services this government offers whenever you like. No one’s put a gun to your head and made you pay taxes. You’re free to leave whenever you like. There are exits in all four cardinal directions.

  • Ooh Ooh! “Says incredibly hateful monsterous things and thinks it’s perfectly polite, but gets his panties in a bunch if you use words you’re allowed to use on broadcast TV after 9”. I think I’ve got bingo!

  • dpolicar

    …except, well, north leads to Canada.

    The idea of fleeing to Canada because one is fed up with U.S.-style socialism has just given me a fit of the giggles.

  • I am also very aware that the Nazi regime gained popularity and broad
    acceptance among ordinary Germans after it came to power by initiating
    numerous “social welfare” programs similar to Obamacare.

    Gee, I wonder who Chancellor Bismarck was. Hint: he actually developed the foundations of the German social welfare state, not the Nazis or even the Weimar Republic.

  • And batting 1.000 for another language prude being a right-winger.

  • I swear to god, if I had the money I’d personally buy all these Internet Libertarians one-way tickets to any governmentless jurisdiction of their choice just to shut them up.

  • Baby_Raptor

    Only children judge people based solely on the words they use. Run off to Mommy and cry because the mean person on the internet made sounds you don’t like. We’ll be here when you manage to come up with an actual argument.

  • Baby_Raptor

    it cuts down on the people he has to reply to. It’s easy to declare yourself the winner of an argument when you’ve found ways to write off every single responder, so I imagine he makes rampant use of such BS.

  • Daniel

    You’re a terribly, terribly clever man and I struggle to see how I could ever have disagreed with you. And being colossally patronizing only furthers your case.

  • Hey, paleface, I’m a native, so take your intrusive foreign gubbermint and its taxes back to where you came from.

  • Suggesting you stop relying on force for your daily bread is incredibly hateful? Hmmm.

  • Especially funny to Canadians.

  • Your right this time, sorta, for the first time. But tell me something I don’t know. I suspect all you OPM eaters celebrate Bismark’s stupidity instead of Christmas because of those programs he instituted thinking it would trump the commies’ promises of nirvana and allow him to survive as a ruler. As if socialism was somehow different than communism. Of course I didn’t say Hitler and the national socialists “developed” “social welfare,” they just initiated some of the many programs that had been ditched by the German Weimar socialists due to the Great Depression (proving in advance the truth of Maggie Thatcher’s witty remark that the problem with socialism and socialists is that eventually they run out of OPM), and added a number of their own, falling for the economic theorytales aold J.M. Keynes recommended to Hitler in the foreword to his German edition of his, ha, ha, GENERAL THEORY, etc.. Nice try, Neutrino, but don’t quit now just because you fell into an empty pool.

  • Funny thing about us voluntaryists, if we played the silly game of politics, which enthralls the leftists and rightists, we would be judged to be far more liberal than progressives, who worship the same god of the state as right-wing conservatives, and have more in common with neocons from our perspective than some Tea_party smarties.

  • Hey silly boy, it is you progs that will be leaving when we dispose of the state. You have to leave ’cause you wont have the IRS collecting OPM for you to suckle; no more gubberment teat so to speak.

  • And your argument is what? I haven’t been introduced to anything but a boatload of progressive palaver.

  • You are a very odd collection of words centered around “OPM”. Tell me, *chinhands* have you ever benefitted from anything you consider “OPM”?

    And please, enlighten me as to why you haven’t moved somewhere with considerably lower taxation? I hear Russia and Africa are quite in vogue for that these days.

  • Tell me Daniel, do progressives fell constantly patronized because they have an inferiority complex, or is it only when they are wrong?

  • Congratulations.

  • I’ll tell you a little secret, dpolicar, although it is actually fairly well known among some people: If you try your best to be absolutely honest in everything you do, even though you fall short of that goal as we all do, you will find yourself surrounded by people you can trust and very seldom if ever transact business with someone who would not live up to his or her contracts, even when it was disadvantageous to do so. I worked in the financial securities industry for ten years as an over-the-counter proprietary trader, transacting ten to perhaps a hundred trades every day all worth thousands, tens of thousands and more dollars, and all by verbal contracts, and I do not think in all those years I ever experienced anyone not living up to their verbal commitments, even when, by the time some transaction called for settlement, the other party might be out a lot of money on the trade. I don’t think my experience was at all unusual, for business is conducted that way all over the world everyday. Interestingly, about the time I entered the business (1961) Bernie Madoff was just getting starting with his o-t-c- trading firm. At least among the traders I knew, his firm had a reputation as what we called “a weasel,” and I avoided trading with his company.

    However, to answer your question: I do not have the right to use force for any purpose, including enforcing a contract. I would take my loss, and of course wouldn’t do business with you again if I thought you were dishonest in breaking the contract, and I might even share my experience with others, which could possibly make your decision not to live up to your contract regrettable in due course. By declining to use force there is a very good chance my loss to you would very quickly be negated and more than offset by some unanticipated good fortune. I can’t explain how that works, but it does, at least in my experience. I suspect it is a spiritual phenomena, which the principles Jesus espoused could probably explain, although I doubt if I could for not fully understanding them.

  • dpolicar

    I expect so, yes. The ones I shared it with certainly got a kick out of it.

  • dpolicar

    OK, fair enough.

    And, sure, if there are spiritual and unexplained forces making it very likely that those who eschew force and deceit experience unanticipated compensatory good fortune when abused by the force and deceit of others, then the rest of your position follows.

    Thanks for clarifying.

  • AlexSeanchai

    This thread’s still going? He hasn’t got bored and left yet? Sad.

    *pokes about trash folder* *cracks up laughing* I make twenty-six grand a year, and that makes me ruling class because I’m a public servant. That’s the fucking funniest shit ever.

  • Baby_Raptor

    Please be benevolent to us plebes, Ellie. We love you!

  • AlexSeanchai

    *laughs harder* (not at you)

    The whole POINT (well, one of them) of having a government is so that the people who are not ruling class do not have to depend on the benevolence of the people who are!

  • Baby_Raptor

    Which is a flaw in the plan, apparently.

  • AlexSeanchai

    Yep. *sigh*

  • Daniel

    Generally it happens when people talk down to them, for example by calling them “my boy” and diminutives of their names to make themselves seem superior to them. Just to answer your question.

  • No, never benefited, since ALL government initiatives are predicated upon the initiation of force, which is all of ’em, and due to that methodology they cost far more in taxes than they are worth, and since I’ve been mulcted for my “fair share” of taxes by government thugs, as I can safely presume you have been as well, although you don’t know it, I have never benefited from anything paid for with stolen wealth. I,m sure I can say the same for you. I’ve been ripped off on a net basis for such amenities as roads and national defense, paying, twice to exponentially more for all those stolen resources you confusedly believe are “benefits” derived from OPM.

    I’m a native American. I look forward to the day when we Americans renounce the use of force to get our daily bread at gun point from out neighbors. I count on those living here who remain statists leaving for places that still engage in legal plunder, and taking their foreign-born gubbermint with ’em.

  • How did I guess you were a public servant, Ellie?

  • Uh, hu. Sure. Sigh.

  • Never applied for welfare? SNAP? WIC? any payments from the Bureau of Indian Affairs? Even, oh, state tax rebates like in Oregon which mandate returning budget surplus funds?

    How about capital gains tax deferments? Oil depletion allowances?

    You would be surprised just how “OPM” gets into your hands.

    Or do you only define “OPM” as what shiftless lazy black people get while popping out babies? There is a whole layering of assumptions that lurk behind just what people like you define as “OPM” which is “taken by force and given to other people”.

  • People wouldn’t talk down to them if they didn’t engage in attempts at malicious parody and not-so-subtle put downs themselves. Come, come, you’re not fooling anyone,.

  • AlexSeanchai

    I get OPM in my paycheck because I work for the government. Ned said so. Never mind that this division brings in enough money from happy customers that we pay our own damn paychecks.

  • Daniel

    I wasn’t attempting to fool anyone, just to point out how bizarre your ideas were- that’s why I mistook you for a parodist. I wouldn’t call it malicious, either. I thought you were joking.

  • I must now bid adieu to all of you lovely progressives, and thank you for engaging in this discussion. I’m turning the thread off now, so you can say anything about me without fear of rejoinder. It’s been fun. If I’ve offended some of you, let me say I see it ithis way: progressives like to think of themselves as sympathetic to the plight of the poor and downtrodden, when along comes this voluntaryist implying they are not so kindhearted when the seek to succor the poor with other people’s money. I realize if you’ve never thought about your progressive government programs and policies the way I do that it may have come as a shock to your sensibilities. I only hope I’ve stimulated you to take a second look at your embrace of forcible measures.

    I’ve got my google alerts set so that if another article appears on this site claiming Jesus endorsed taxation or the violent state, I’ll probably see it andI will return to defend his reputation for unblemished integrity. Until then, tootleooo.

  • dpolicar

    * waves bye-bye *