Debate on Clergy Housing Deduction  Benefit

Kenneth Cauthen

Copyright ©   Kenneth Cauthen 2006

Entries appear in chronological order.

Dear Clergy,

The damn New York Times has stopped preaching and started to meddle. I knew our unfair tax breaks on housing would come to light one day. I see no reason why I should be able to deduct my housing expenses while my neighbor cannot. But when it gets threatened, all the church boards, including mine, rush in to lobby Congress with all sorts of dubious reasons why the clergy housing deductions should be preserved. They act just like any other institution to defend self-interest. It is unjust, but I claim every penny of mine, don't you?



    Dear Brother Cauthen,

Sometimes a matter has to be understood in its proper context. The reason you get a housing deduction is that "the community" once believed that it was helpful to have a "settled" pastor in place as the frontier developed. It also gave free land to school boards. This settled pastor also got a given amount of corn and produce from the fields, and very little money. Pastors still  get very little money, but no corn or wheat. Then it was recognized that a pastor was not eligible to use his time and energy to participate in the free economic enterprise system of profit and production....meaning, of course, that he would have a  smaller salary than other professionals, so he gets special treatment on housing. Often times the housing is owned by the church, so when retirement comes he is out on his ass with no where to go. (You ought to have yours kicked for writing this peace!) When churches start paying pastors really livable salaries and giving them benefits comparable to doctors and lawyers and other professionals (state retirement programs and health insurance comparable to University professors and civil servants of the state) you go right ahead and take your housing deduction and do not feel for one second that you are slighting your neighbor. Both you and your neighbor bring something important to creating, re-creating and sustaining community and this has nothing to do with where the nub of the issue is for our day. I used "his" in describing the "getting it together years" for defining how a local pastor gets compensated because in those days the pastors were all "he". So you may feel free to go back through my paragraph and insert "he/she" to make it up to date. But the housing allowance issue will still come out the same. I think this issue may come under what you used to teach as "contextual ethics."

Peace and blessings to one and all from down here in your home state of
Kenneth Dean, Sr.


My dear  apostate Baptist, Colleague, Friend, fellow Southerner,  fellow lover of  old-time country music,

To steal from Kant, we have here a nest of "dialectical difficulties" that I won't pretend to untangle completely but will make a few marginal comments. I see two arguments in your reply: one about community building and the other about the poor compensation of clergy.

Your first argument about settled clergy serving a community-building function meriting state subsidy predates the incomes tax we are talking about and smells like the era of established churches in a state that sees religion  as creating disciplined, virtuous, but docile citizens who will not threaten the status quo. That is an argument for the conservative role of religion in society that pleases the state, but it is not one that  a Baptist ought to be making. If we fufilled our role as descendants of the OT prophers, Walter Rauschenbusch, and Martin Luther King, Jr. associated with the beloved serminary at which both of us have taught, we would be as often raising hell and disrupting the community -- as you have done more than I have in the past.

In the income tax era, the rationale has been stated in a brochure prepared for Jewish clergy, and I quote:

    When the income tax  was enacted, clergy salaries were negligible: Many, if not most clergy were given a place to     live, minimal provisions, and a very small salary. The fair market value of non-cash items was to be counted as         income, but the government recognized that it was unfair to tax clergy on the value of the parish house. Thus the     parsonage exemption was created."

Assuming that this is the historical justification, it seems weak to me. Why should the value of a house not be counted as taxable income? It is the functional equivalent of  cash paid that can be used to rent or buy a house. In any case it constitutes a direct state subsidy to clergy and indirectly to the religious institutions that employ them. It, in effect, adds income to clergy at government expense. OK, clergy as a whole are poorly paid compared to other professionals. That is a problem, but why is it the state's problem? The near-poverty status of clergy is no justification for a government subsidy unless it is combined with something like your "community building" as a service to the community or some other rationale for uniquely privileging clergy. I have ready rejected that.

The argument from poor clergy compensation as such has no merit at all. Lots of working people are as poor or poorer than clergy on the average. Why should they not have a housing deduction too? Of course, we all have more money to spend because of the housing deduction, but to argue that I could not have done X or Y or Z without it is no argument at all.  It simply recognizes that the government pays us a certain amount because we are clergy. What is the current justification of the housing bonus? I know of none whatsoever apart from the sheer self-interest of clergy.

Just for the record, a housing deduction is in effect a direct grant of money to clergy and eligible religious institutions and as such is a violation of the separation of church and state, understood strictly, as Baptists should interpret it.

That is my basic response. I will offer some concluding thoughts just for the hell of it.

The aides in the nursing home who changed my Mother's diapers are very poorly paid, and they could use a government subsidy to help with housing expense. The same could be said for janitors and maids who clean the toilets of professionals and business types at a pittance of what  those  who dirty the toilets make. I would argue that such people also contibute to  "community."  By the way, it should be a law strictly enforced that those who dirty toilets should be compelled to clean them in proportion to their usage. George with a plunger and Laura with a toilet brush in the White House would be a  splendid model for America. This task teaches humility, virtue, discipline, and promotes delicacy in using toilets and would be for us all a community-building enterprise. Get this law passed, and I will argue that a housing deduction should be given to all who earn it through toilet cleaning.

By the way not all clergy are poor:  In  1995 Pastor Rick Warren of the 18,000 member Saddleback Community Church in California deducted $79,999 for actual housing costs—the IRS challenged the deduction, claiming the “fair market value” (rental per year) would allow only $59,479.

Nevertheless, my fellow-Baptist, you offered the best defense of an erroneous position I have seen lately.

Yours in service to Jesus, our model, who said, "Foxes have holes, and birds of the air have nests; but the Son of man has nowhere to lay his head."  Matthew  8:20
Ken Cauthen


Since my impulsive outburst about the clergy housing deduction, I realized how ignorant I was of its history and rationale. Since then I have Googled and learned enough to be an untrustworthy guide. Like so many issues it gets very complicated with many complexities, ambiguities, nuances, subtleties, distinctions, and fine points of  law and logic. Courts, Constitutional lawyers, and Judges, including those on the Supreme Court, have argued for and against it.  Here is the gist of what I have learned.

1. Exemption of religious institutions from property tax goes back to the beginning of the country. The argument for it is that it is necessary to separation of church and state in establishing sectarian sovereignty as a protection against state action.  The tax exemption does not subsidize churches, but leaves them alone. Some judges argue that religion serves a secular purpose that merits state support.  Justice Brennan stressed the "secular" benefits to society of these exemptions: these institutions foster "moral or mental improvement" and are "beneficial and stabilizing influences in community life."  This is the Dr. Kenneth Dean’s point.
(Walz v. Tax Commmission, 397 US 664 (Decided May 4, 1970)

2. In 1921 the parsonage exemption was established in the income tax code, which dates from 1913, enabling clergy to exclude from income the value of the housing provided. Since 1954, the provision had also shielded clergy members from taxes on the entire portion of their paycheck designated by their congregations as a housing allowance, whether they spent it on renting an apartment or buying their own home. But the rules the IRS. adopted in 1971 limited the deduction to the smallest of three amounts: the “fair market rental value” of the home, the housing allowance paid to the minister or the minister’s actual housing expenses.

3. In 1996 the IRS ruled that Rev. Rick Warren had exceeded the “fair rental value” in his claim and reduced it. On May 16, 2000, the United States Tax Court struck down the IRS cap and ruled that clergy members could deduct “the amount used to provide a home,”  however much that might be. The IRS appealed  to the United States Court of Appeals for the Ninth Circuit in San Francisco. A great battle ensued in the Court aided and abetted by major Protestant, Catholic, and Protestant church agencies. One question raised was whether the clergy housing deduction violated the Constitution.  Before the Court could decide the Clergy Housing Clarification Act of 2002 had been approved unanimously in both houses of Congress and signed into law by President Bush.  The law ruled that no limits would hold on past housing claimed but from now on the “fair rental value” rule would apply. That’s where we are now.


1. Some clergy who live in employers provided housing as a condition of employment or for the convenience of the employer are eligible for tax relief under general rules of tax law that have nothing to do with religion. Granting a housing exemption to all clergy prevents discrimination against those who don’t qualify under that rule.

2. Tax relief favoring religion has deep historical roots. Therefore, the parsonage exemption is well within the accommodation tradition through the early colonial and national period, including most significantly the dis-establishment era, right up until today. Indeed, the parsonage exemption is part and parcel of the types of reasonable accommodations listed by the three dissenting justices in Texas Monthly. These reasonable accommodations, described by the three justices as those which “today permeate the state and federal codes, and have done so for many years,”


1. It is a subsidy to religion in violation of the Constitutional separation of church and state. Legal scholars, Constitutional lawyers, and Judges  at every level including the Supreme Court have affirmed this point.

2. It privileges clergy in relation to non-clergy and thus discriminates against them. Others whose work is valuable to society and who may be as poorly paid as clergy have no such advantage. These other low-paid care-givers, community builders, and workers essential to society have to provide for their own housing during working years and retirement without benefit of a housing deduction.

Moreover, clergy are allowed to "double-dip" in that they can count mortgage payments and property tax as part of the housing expenses to be deducted and then deduct them again on their 1040 forms just like everybody else.

Granted that, unlike most other people, they do have to pay all their Social Security taxes,  but so do all other self-employed persons.

I include some references:
“In the context of tax benefits, the “subsidy” label is usually deployed in a conclusory and unconvincing fashion. The First Amendment is best understood as permitting governments to refrain from taxation to accommodate the autonomy of religious actors and activities; hence, tax benefits extended solely to sectarian institutions should pass constitutional muster as recognition of that autonomy. Since it is most compelling to conceive of religious tax exemption as the acknowledgment of sectarian sovereignty, rather than the subsidization of religion, there is no convincing constitutional reason to link that exemption to the simultaneous extension of comparable tax benefits to secular entities and undertakings.”
Edward Zelinski, friend of the Court in Rick Warren case.
Friend of the Court Opinion in Warren Case
"Therefore, the parsonage exemption is well within the accommodation tradition dating at least to 1601, and extending through the early colonial and national period, including most significantly the dis-establishment era, right up until today. Indeed, the parsonage exemption is part and parcel of the types of reasonable accommodations listed by the three dissenting justices in Texas Monthly. These reasonable accommodations, described by the three justices as those which “today permeate the state and federal codes, and have done so for many years,”  
1970 court decision SC of USA upholding tax exemption of church property.
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About the Author
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Blogs of Mine 2005, Part  I
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Pope John Paul II: Blessing and Curse to the World
 Outrages of the Schiavo Case
Final Reflections on the Terri Schiavo Case
Liberal Church as Impotent Political Force
 Interpreting the Bible Today
 The Authority of the Bible
 Using the Bible with Integrity
 Theology as Religious Belief
 What I Believe
 Natural Law and Moral Relativism
 What is Truth -- and Does it Matter?
 A Doctrine of God (Short Version)
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Trinity: God, Christ, Spirit
 God as Masculine and Feminine
 Theodicy: the Problem of Evil
 Theodicy: A Heterodox Alternative
 The Many Faces of Evil
 A Contemporary Christology
 Christ and Christians:
A Critique of Nieburhr's Christ and Culture
 The Incompatibility of Christianity and Civilization.
Christian Ethics
Process Christian Ethics
The Ethics of Belief
Relativism, Morality, Belief
Relating Jesus to Jefferson
 Liberation Themes in Country Music
 Liberation Themes in White Southerners
Southern Tragedy
Capital Punishment
Physician Assisted Suicide
Prescription Drugs and the Little Red Hen
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Homosexuality: Same Sex Love is OK
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