Definitely Read This As It Has Big Implications: Judge Rules Against Clergy's Tax Free Housing Allowance
November 25, 2013
"The elders who direct the affairs of the church well are worthy of double honor, especially those whose work is preaching and teaching." 1 Timothy 5:17
Christianity appears under increasing attack in our culture from all directions. The latest news came last Friday when a Wisconsin judge, appropriately named Crabb, ruled the ministerial housing allowance is unconstitutional. We recently noted such fallout could occur as a side-effect of the controversies surrounding a relatively small number of ministers owning multimillion dollar mansions. Indeed, Annie Laurie Gaylor, Co-President of the Freedom from Religion Foundation, which brought the lawsuit, was quoted by the Wisconsin State Journal as saying the following, "When you're dealing with some of these mega-church pastors with huge mansions, they can be paid an enormous amount in housing allowances". Sadly, she is correct in that assessment. Under a 1954 law meant to help the clergy who are typically poorly paid, the government established the right of churches and other religious groups to provide part of an ordained minister's compensation as a tax free housing allowance. The allowance can be equal to the amount for which a minister's home could be rented. Accordingly, some mansion owning, mega-church pastors like Stephen Furtick, Joel Osteen and Ed Young could be pulling down tax free housing allowances worth six figures annually. This was certainly not the intent of Congress when it passed the legislation. Atheists and Christians alike should be outraged by such abuse of this well-intentioned law.
The sins of a few often cause pain for many innocent bystanders. The ruling will not hurt just the substantial wallets of mega-church pastors. If this ruling stands, many low paid pastors and their small congregations will face real economic hardship since their wallets are already empty. Some churches could even be forced to close. Gaylor, Judge Crabb and those like them make no distinction between the abusers of the law and those ministers who bring much more good to their community than whatever small tax break they get from this law. Others seeing the high profile financial abuses by relatively few pastors are calling not just for the ministerial housing allowance to be abolished but for tax exempt status of churches generally to be outlawed. This ruling on housing allowances may be just the first battle in a broader war by those seeking to undermine the economic underpinning of religion in our country. This is a potentially very big deal which could have lasting negative consequences for our nation's churches.
It will be quite telling if the Obama administration does not appeal this decision. The suit was brought against the US Treasury and the IRS and it will be up to the administration to lodge an appeal. Given the breadth of the ruling, there would not appear to be room for a legislative fix. While this news just broke, we would expect the political pressure on the administration to appeal to grow significantly as churches spread the word though their congregations in the months ahead. No one wants the government to be picking on their pastor! At the same time, those seeking to weaken the influence of the church on our culture will be lobbying to keep the administration from appealing this verdict. Given the politics of the situation (2014 is an election year after all), our best guess at this early stage is the administration will appeal, but much may depend on the strength of their appeal. It is entirely possible they lodge an appeal based on political considerations, but then make a weak argument during the judicial process as they may secretly hope to lose. We will be watching this situation closely as it develops in the weeks and months ahead.