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I never thought anything like this would happen, but it has...

I have been advocating the total abolition of tax free status for all "religious" property, no matter the use. I do not care what others choose to believe, but it is UNFAIR AND IMO ILLEGAL to force every one to subsidize religious property, which we DO because we must make up the lack of these tax funds, which I understand comes to 10's of billions of dollars per year.

This is not right, and should not continue, and I am glad to see this small victory. I hope this will be but a first step in tax fairness.

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Comment Preferences

  •  Churches need to make up their mind (9+ / 0-)

    Stay out of politics and keep your tax exemption, or enter the political area and pay your admission price like everybody else.

  •  Anyone know what the 7th Circuit Court of Appeals' (2+ / 0-)
    Recommended by:
    IndieGuy, watercarrier4diogenes

    make-up is like?  Is this likely to stand up through them and make its way all the way up to the Supremes?

  •  There is a perfectly good reason for ths law. (11+ / 0-)

    In rural congregations, the custom is still not unusual for a church to own a house, and offer it to their pastor rent-free, in lieu of income. This particularly made sense a century ago, when a congregation of poor farmers could just carve out a corner of a field, and throw a house-building party - no mortgage required. This made it possible for them to attract clergy they otherwise couldn't afford to hire.

    But it raises a problem, because the clergy can't actually eat that house. To tax that benefit as if it was cash could put very poor congregations in a bind, as fair market rent on a parsonage could easily be a very large fraction of what they could afford to pay a preacher. Therefore, the clergy would, in effect, pay a punishingly high tax on their meager cash salary.

    For a rich congregation this problem is easy to solve - just tuck a few extra thousand into the pastor's withholding. Not so easy for the poor. So it was decided that a parsonage should not be treated as a taxable benefit.

    In the late 20th Century, this custom declined, because clergy found that, unlike other workers, they were unable to own a home. They could work to age 70 or 80, but have no real estate equity, which used to be the American Dream. So many congregations sold off their parsonages and offered their clergy an equivalent sum to rent or buy a home.

    And there's where the problem arises. If the congregation allows the pastor to live there rent-free, it's not taxable. But if they paid him or her an extra $1,000 a month, and then charged $1,000 rent, then the pastor has received $12,000 of taxable income.

    For that reason, a reasonable housing allowance has been treated as a tax-free benefit. It's debatable whether it should be so treated, but it helps to understand where this law came from in the first place.

    Early to rise and early to bed Makes a man healthy, wealthy, and dead. --Not Benjamin Franklin

    by Boundegar on Sun Nov 24, 2013 at 01:58:17 PM PST

    •  that explains the custom but not the tax (4+ / 0-)

      treatment.  the tax treatment, IIRC, arose as a tax subsidy to thank priests for fighting the godless and the commies.  It's a relic of a despicable era.

    •  Yes, ministers are a special, elite class of (0+ / 0-)

      persons who should not pay tax on their earnings like the peasantry. The law came from the constant favoritism shown in this country toward churches and things religious, pure and simple. There is no good reason for this law whatsoever, such a benefit is not granted to the hoi polloi and hence should not be granted to the anointed.

      That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

      by enhydra lutris on Sun Nov 24, 2013 at 08:19:06 PM PST

      [ Parent ]

    •  Helps to read the decision. That clarifies a few (0+ / 0-)

      things swirling in this discussion. These three paragraphs from the decision itself put two specific things in context (my emphasis).

      In their complaint, plaintiffs challenged both § 107(1) and § 107(2), but in response to defendants’ motion for summary judgment, plaintiffs narrowed their claim to § 107(2), which excludes from gross income a minister’s “rental allowance paid to him as part of his compensation.” (Section 107(1) excludes “the rental value of a home furnished to [the minister] as part of his compensation.”) Because plaintiffs have not opposed defendants’ argument that plaintiffs lack standing to challenge § 107(1), I will grant defendants’ motion as to that aspect of plaintiffs’ claim.
      So, those living in a church owned residence are not involved in this decision. Only those getting the cash instead—with the potential of what one story called "double dipping" in claiming mortgage interest and property tax deductions—are facing a tax.
      According to defendants, in 1921 the Treasury Department refused to apply the convenience of the employer doctrine to ministers who lived in church-provided housing. (Plaintiffs dispute that view, but I need not resolve that dispute for the purpose of this opinion.) Defendants say that, in response, Congress passed § 213(b)(11) of the Revenue Act of 1921, which allowed ministers of the gospel to exclude from their gross income the rental value of housing they received as part of their compensation. (That exemption later became § 107(1).) Finally, defendants say that the purpose of § 107(2) when it was enacted in 1954 was to eliminate discrimination against ministers who could not claim the already existing exemption for ministers who lived in parsonages. In particular, defendants say that § 107(2) was needed to help “less-established and less wealthy religions [that] were not able to provide housing for their spiritual leaders.” Dfts.’ Br., dkt. #44, at 33.
      The start came in 1921 when Treasury refused to grant "convenience of the employer" benefits available to non religious activities to ministers and Congressional action on that resulting in today's § 107(1) exemption on fair market value of housing occupied.
      Because the validity of § 107(1) is not before the court, I must assume for the purpose of this case that Congress did not violate the establishment clause by granting a tax exemption on the rental value of a home provided to a minister as part of his compensation. However, by defendants’ own assertion, the purpose of § 107(1) was to eliminate discrimination between secular and religious employees by giving ministers a similar exemption to the one now codified in 26 U.S.C. § 119 for housing provided to an employee for the convenience of the employer. Assuming this is correct, it does little to help justify the later enactment of § 107(2), which expanded the exemption to include not just the value of any housing provided but also the portion of the minister’s salary designated for housing expenses.
      So, what is being decided here is the fairly modern practice of including in salary the means to buy housing on the open market with all the equity and tax deduction opportunities there. It does not have an effect on that little church that built a house in a "corner of a field" or adjacent to a city church. It is useful to realize 26 U.S.C. § 119 allows other entities to provide tax free housing, even meals, "for the convenience of the employer."

      The only foes that threaten America are the enemies at home, and those are ignorance, superstition, and incompetence. [Elbert Hubbard]

      by pelagicray on Sun Nov 24, 2013 at 08:28:57 PM PST

      [ Parent ]

      •  I was aware (0+ / 0-)

        of some of your points, but I didn't realize secular employees could ever exclude housing from income. I guess I've never known anybody in that position, nor seen it in training.

        The whole thing is a bit of a mess, because there's no obvious solution that doesn't require treating somebody unfairly, compared to a similar somebody.

        The present decision, for example, allows the house to be tax-free, but only if the minister pays neither rent nor mortgage. If the same community charged even $1 rent, suddenly the whole FMV becomes taxable.

        Early to rise and early to bed Makes a man healthy, wealthy, and dead. --Not Benjamin Franklin

        by Boundegar on Tue Nov 26, 2013 at 07:20:46 AM PST

        [ Parent ]

  •  While this judgement apparently regularizes (6+ / 0-)

    the tax status of clergy for housing, it leaves untouched the oddity that they are considered self-employed for social security and must pay the whole of that tax. I hope that if this decision stands that the IRS will correct that side of the equation.

    Is it true? Is it kind? Is it necessary? . . . and respect the dignity of every human being.

    by Wee Mama on Sun Nov 24, 2013 at 02:06:45 PM PST

  •  It's part of their compensation package (1+ / 0-)
    Recommended by:

    So by the same logic, we need to pay taxes on the value of our employer provided health insurance, right?

    “Texas is a so-called red state, but you’ve got 10 million Democrats here in Texas. And …, there are a whole lot of people here in Texas who need us, and who need us to fight for them.” President Obama

    by Catte Nappe on Sun Nov 24, 2013 at 02:20:58 PM PST

  •  "The power to tax is the power to destroy." (0+ / 0-)

    So observed SCOTUS many generations ago.

    If a tax results in a tire store or restaurant closing, that's a shame, but it doesn't raise big constitutional questions.

    If a local church closes, it DOES.

  •  Churches are private clubs that should pay taxes. (3+ / 0-)
    Recommended by:
    Buckeye54, tgrshark13, enhydra lutris
  •  It's worth noting that... (4+ / 0-)

    ...the average US congregation has 75 members and a budget of $90,000.

    It's very easy to say, "oh, yes, get rid of this exemption, and the one for church-owned property, and the minister's self-employed Social Security status, and oh let's revisit their entire tax-exempt status," but reversing all of those will bankrupt the average US church.

    I know that there are those here who long for just such an outcome, but the average US church is nothing like the televangelists' arenas or the urban/suburban megachurches we see in the media.

    Shall we cast them all aside?

    The word "parent" is supposed to be a VERB, people...

    by wesmorgan1 on Sun Nov 24, 2013 at 02:41:35 PM PST

    •  Little Country Churches - (2+ / 0-)
      Recommended by:
      Buckeye54, zinger99

      Based on personal experience I can emphatically say that little country churches are as deeply involved in politics as the big mega churches!  They just don't have the financial resources to make their message as well known.  They do however have the ability to impact the voting behavior of their "flock".  In fact in many small churches the peer pressure is very intense to conform to the "message" coming from the pulpit.


      There are a lot of ways to succeed, but one sure way to fail is to quit.

      by jedennis on Sun Nov 24, 2013 at 05:31:58 PM PST

      [ Parent ]

    •  Firstly, who cares wht it is like? Our pool and (0+ / 0-)

      brew club has a lower budget than that, and we get no special tax treatment. More importantly, this is not a tax on churches, but simply does away with a special provision letting ministers off the hook for the taxes on part of their salary.

      That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

      by enhydra lutris on Sun Nov 24, 2013 at 08:30:34 PM PST

      [ Parent ]

  •  I absolutely agree. (1+ / 0-)
    Recommended by:

    Especially the for profit faith based businesses, and the commercial property that churches own and lease out, tax free.

    Especially the for profit faith based hospitals that can charge whatever they want, push indigent patients off on the tax payer supported public hospitals, and not pay local, state or federal taxes on the profits.

    Its not wonder that so many "home town" hospitals are going under.  They compete in a market that is hugely tilted to their disadvantage.

  •  Taxation (0+ / 0-)

    The power to tax is the power to destroy. Religion was given status in the Bill of Rights because the founders didn't want to tax people to fund a state religion or eliminate or suppress religious thought or particular religions because they had valuable property to tax. Also many charitable activities were run by churches and they do not really engage in profit seeking activity. Imagine if you taxed 2 neighbors for carpooling to work by defining one of them chipping in cash for the gas as income for the other.

    Churches worked to rearrange money between the members and distributed money to children, widows, orphans and other unfortunate people. As long as they stick to that type of activity I don't want them taxed. When they engage in a commercial enterprise or insert religious tests into politics and government perhaps they should be regulated for that behavior rather than tax them out of the meals on wheels program or childcare for poor working families. Especially in light of the fact that government won't do these things and no one else will pick up the slack (which group helping poor has the ability to do more than they already are?) if the churches are taxed out of existence.

  •  I was aware that this is separate from (0+ / 0-)

    the property exemption...but BOTH are absurd and should be repealed. The current laws FORCE EVERYONE to support all religions, but ministers/clergy and the industrial plant. Personally, I have no desire to be forced to support any religious belief at all. I see no real benefit to it, an lots of harm. I have no quarrel with anyone's beliefs, or with their desire to maintain any church, but I do not want to pay for it. If YOU believe it, YOU pay for it.

    Anger management class really pissed me off.

    by old mark on Mon Nov 25, 2013 at 08:17:48 AM PST

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