Tax break for clergy questioned

From 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.

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.

Sen. Charles Grassley (R., Iowa), a member of the Senate Finance Committee, said he wants to ensure that the spirit of the provision isn't violated.

"It's fair to question why a clergy member needs a tax-free allowance for more than one home, and whether tax-exempt churches should subsidize millionaire ministers," he says.

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As with most issues before Republican U.S. Sen. Grassley, he'll likely let this issue die and fade away and keep the status quo and claim that his committee lacks the resources to pursue the issue further.

The "parsonage allowance" does raise an interesting question of whether Catholic priests and bishops should be living in government subsidized, luxury housing. Does the "parsonage allowance" actually enable abuses by priests and bishops? Is it time for a more adult approach to ministry, e.g., like actually paying a just wage for priests and bishops and allow them to find their own housing? Perhaps in this way the decades' old practice of abusing parish and diocesan finances might be reduced or even eliminated.


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