Small congregations and their clergy would be hit hardest if high courts affirm a landmark November ruling that deemed clergy housing allowances and their unique tax benefits unconstitutional.
That’s according to Thomas Moore III, executive director of the Society for the Increase of the Ministry, a Hartford-based organization that raises money for Episcopal seminarian scholarships.
“The fact that that [a housing] allowance has favorable tax treatment for a profession that pays modestly is a huge benefit” that most clergy utilize, Moore said. If that benefit goes away, he added, “it will definitely have an effect.”
Moore offered thoughts in the wake of a ruling from the U.S. District Court for the Western District of Wisconsin in a case brought from the Wisconsin-based Freedom from Religion Foundation. The ruling could be appealed to the 7th U.S. Circuit Court of Appeals and eventually to the U.S. Supreme Court.
Moore emphasized that it would be premature to expect clergy are going to lose their housing allowances. The housing allowance provision will stay in place until all appeals are exhausted, which could take years, and it still might survive the legal challenge.
Clergy who don’t live in parsonages are exempt from federal income taxes on the portion of their pay that goes toward housing-related expenses, such as rent, furnishings, and utilities. If the federal ruling stands, it would amount to a five- to 10-percent tax increase for most clergy.
Large numbers of Episcopal clergy utilize the housing benefit since most no longer live in parsonages, Moore said. Hardest hit, he predicts, will be the 80 percent of Episcopal parishes that have fewer than 50 worshipers on an average Sunday.
“It has the potential of accelerating trends that are happening for other reasons,” Moore said.
He explained that a housing allowance is an important benefit that even the least well-off churches can offer because it costs nothing to provide. If that benefit goes away, then unique pressures felt by clergy in small churches will likely increase in ways that have implications for ministry.
“The rector of a large parish, in the stewardship sermon, is preaching for support of different ministries or missions,” Moore said. “The rector of a small parish is preaching for his or her salary. It’s a very different pressure. And it’s going to be that much more of a pressure if the housing allowance is disallowed.”
G. Jeffrey MacDonald is an award-winning religion reporter, United Church of Christ pastor, church consultant and author of Part-Time is Plenty: Thriving without Full-Time Clergy (WJK Press, 2020). His website is gjeffreymacdonald.com.
