AN INCOME TAX DEDUCTION NEARLY HARMED 200,000 TO 300,000 CHURCHES
On March 15, 2019 the Federal 7th Circuit Court of Appeals issued an opinion that caused religious leaders to breathe a sigh of relief. The case involved whether parsonage allowances are taxed as income to the pastors, priests, rabbis and others who receive them. Here are some main points from the verdict:
- In briefs filed urging the court to uphold the parsonage allowance, the U.S. Treasury Department and several intervening religious organizations asserted that the survival of many congregations was dependent on the parsonage allowance.
- Responding to an IRS attempt to tax parsonage allowances, Congress enacted 26 U.S.C. § 107, which provides:
- In the case of a minister of the gospel, gross income does not include—
- (1) the rental value of a home furnished to him as part of his compensation; or
- (2) the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home ...
- A brief filed in support of the parsonage allowance estimates that of the United States’ 384,000 congregations, 200,000 to 300,000 provide a housing allowance to their ministers under 26 U.S.C. § 107(2).
- Freedom From Religion Foundation (“FFRF) filed suit in the district court claiming that §107 violates the Establishment Clause of the First Amendment and the lower court agreed and ruled that the statute’s true purpose was to “provide aid to a group of religious persons.”
- The Appellate Court ruled, in a somewhat tortured opinion, that the parsonage allowance was not the government providing assistance to religion but constitutional as treating all religions the same.
In an article posted on Investopedia.com, Julia Kagan discussed the parsonage allowance. Here are some of the main points:
- The parsonage allowance is an allowance to clergy, rabbis or ministers for the expenses of providing and maintaining a primary residence and is often called a rental allowance or housing allowance.
- Section 107 of the Internal Revenue Code (IRC) allows ministers of a religious body to exempt some or all of their housing allowance from gross income for income tax purposes but it is included for self-employment taxes.
- The pastor, rabbi or minister can exclude from gross income the lesser of the following amounts:
- the amount designated as a housing allowance;
- the amount actually used to provide or rent a home; or
- the fair market rental value of the home (including furnishings, utilities, garage, etc.)
THE IMPACT ON CLERGY AND RELIGIOUS INSTITUTIONS IN THE UNITED STATES
According to an article posted by Church and Tax Law, the parsonage allowance is estimated to be worth nearly $1 billion annually for clergy members.
Churches are not directly subject to income taxation and are not required to file income tax returns. The loss of the parsonage allowance would mean that churches would have to pay at least a billion dollars more in compensation in order to provide the same amount of net income to clergy.
Of course, a church paying an additional billion dollars to their clergy will mean that the churches will have a billion dollars less to perform their activities, or they will have to obtain the billion dollars from additional donations from their members or a combination of both.
THEY DODGED THE BULLET BUT…
Assuming that the ruling by the 7th Circuit is not overturned by the U.S. Supreme Court, it is a warning to all of the Americans that the income tax is a powerful weapon in the hands of Congress and the Swamp to dramatically affect the operations of churches. If the decision had been that the parsonage exemption was improper, we can see how it would have adversely affected churches.
The main reason that the parsonage allowance was not rejected is that Congress had enacted a specific statute. If this statute was repealed, the parsonage allowance would no longer be available. If many churches have come to rely on the availability of the parsonage allowance, then they are in fact under the thumb of Congress and the Swamp.
This becomes a real problem if some of the voices now in Congress become in a position to change this law.
Under the FAIRtax, there is no need for a parsonage allowance. None of the money paid by the church to their clergy will be taxed. Like everyone else, the clergy will receive the prebate and be taxed like all of the rest of us. Donations to the churches and places of worship will not be subject to the FAIRtax.
In 1784 to 1785, James Madison wrote A Memorial and Remonstrance, on the Religious Rights of Man. This was his comment on religion:
“The Religion then of every man must be left to the conviction and conscience of every man; and it is the right of every man to exercise it as these may dictate. This right is in its nature an unalienable right. It is unalienable, because the opinions of men, depending only on the evidence contemplated by their own minds cannot follow the dictates of other men: It is unalienable also, because what is here a right towards men, is a duty towards the Creator. It is the duty of every man to render to the Creator such homage and such only as he believes to be acceptable to him.”
How different is a society where a single change in the Internal Revenue Code could impose perhaps a fatal burden on a number of religious organizations?
As the 19th century historian Lord Acton said, “Power tends to corrupt and absolute power corrupts absolutely.”
The FAIRtax takes away the threat that a court decision, the bureaucrats or Congress can cripple our religious institutions.
Isn’t it time to take back control from D.C.?
President Trump, “Embrace the FAIRtax and real tax reform! What have you got to lose?”
It is time to PASS THE FAIRTAX!
The truth is the truth. Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
Call up the local or D.C. offices of your House Member and two Senators and you can use the following script:
WHAT CAN EACH OF US DO
- I am sure that Representative ____ or Senator ____ is in favor of everyone obeying the income tax laws.
- After they assure you that their boss is not in favor of anyone breaking the law, ask if they are aware of the Cebula study showing $9 trillion of evaded income/payroll taxes over the next ten years.
- Since most will say they don’t believe their boss has seen the study, either drop off a copy or get an email address and send a copy to them for their boss.
- Say you are going to call back in a week and ask what the Representative or Senator is going to do to stop this evasion.
- In a week, call back and ask specifically what the Representative or Senator is going to do to enforce the law.
- They probably will say their boss believes that simplifying the income tax will handle the problem.
- Explain that when people evade income taxes, they are also evading the 15.3% payroll/Medicare tax and state income tax. So it is unlikely that they are going to pay 30% or 40% when they were paying 0% because they have already decided it is okay to cheat.
- Say that the only way to reduce evasion is to increase by tens or hundreds of thousands the number of comprehensive IRS audits done each year.
- Point out that Evaders do not self-identify by putting an “E” on their income tax return.
- 80% of the people likely to be audited are trying to comply, but they will be forced to endure these IRS audits as well.
- Ask if the Member is in favor of this?
- If they say no, then ask again how the Member proposes to stop people breaking the income tax laws.
- Then explain that the way to handle evasion without unleashing the IRS audits is the FAIRtax.
If you can see your Member or attend a town hall and ask these questions, you can be even more effective.
FAIRTAX POWER RADIO
#153 Brainwashed By The Tax Code
At a recent outdoor event in which FAIRtax volunteers set up an information booth, one man insisted that the FAIRtax was not fair because a person with high income might not be taxed “enough” if they did not spend all of their earnings. And no amount of explanation could convince this man of the fairness of the FAIRtax and how unfair his expectations were. All he has ever known is the income tax and the wealth envy that accompanies it.
He has been brainwashed by the income tax, the IRS and members of Congress who use the tax code to pit Americans against each other.
The FAIRtax Guys discuss the various ways in which a few (very few) people defend the current system and resist any change. Fortunately most people embrace the FAIRtax once they take the time to to study it.
That is the purpose of FAIRtax Power Radio - to help people learn that there is life beyond the income tax and the world they know will not fall apart when the income tax is replaced by the FAIRtax.
If you believe the FAIRtax is good for America, let others know by turning them onto FAIRtax Power Radio - the ONLY weekly FAIRtax digital TV show in the country! Watch every Wednesday at 11:30 AM (ET). We stream to Facebook LIVE (www.facebook.com/fairtax).
FTPR podcasts for each show are posted on Spreaker (http://bit.ly/2oesbk7), iTunes & iHeart Radio every Friday morning. A free FAIRtax Power Radio app is available for iOS and Android. Since it’s a podcast, you can download it and play it whenever it’s convenient for you.
The FTPR weekly episodes are shared to a number of Facebook pages:
- FAIRtax Official (https://www.facebook.com/FairTax/)
- The FAIRtax Guys (https://www.facebook.com/thefairtaxguys/)
- Democrats for FAIRtax (https://www.facebook.com/DemocratsForFairTax/)
Please help us educate as many Americans about the FAIRtax as possible. Be sure to tell everyone you know about this great new format for FAIRtax Power Radio. Whether you watch the weekly video or listen to the weekly podcast, this is a great way for more Americans to learn about the best tax reform plan in Congress at this time.
Remember, FTPR digital TV every Wednesday at 11:30 AM (ET) followed by the podcast on Friday morning. Please watch, listen, and tell everyone you know about the FAIRtax Power Radio. The FAIRtax: Once You Understand It, You’ll Demand It!
AMERICA’S BIG SOLUTION - THE FAIRTAX PRIMER AMERICA NEEDS
For someone not familiar with the FAIRtax, America’s Big Solution provides a starting point in their study the FAIRtax and is meant for people of any age. And you can download it to your tablet or smartphone right now. It’s also available in print form. See below.
Do you know someone who would like an introduction to the FAIRtax and would prefer to read about it in a booklet rather than search online for Tweets, Posts and Shares? If so, America’s Big Solution is their best choice.
America’s Big Solution is an introduction to the FAIRtax written by Terry Tibbetts, author of A Spartan Game: The Life and Loss of Don Holleder, with help from Ron Maiellaro, President of the Florida FAIRtax Educational Association.
You can buy an electronic version of ABS as follows: AMERICA’S BIG SOLUTION is available for only $2.99 for the Amazon Kindle (http://amzn.to/1WIRHry), the Barnes & Noble Nook (http://bit.ly/1XeG8bH) and Apple iOS (http://apple.co/1tnqK0P).
You can purchase a print copy at the same Amazon link above for $9.25. Regardless of whether you choose the electronic format or the print format, you’ll find AMERICA’S BIG SOLUTION will give someone the boost they need to begin their study of the FAIRtax and the suggested resources to learn more. Buy AMERICA’S BIG SOLUTION now!
LINKS TO MORE INFORMATION
These links will help you promote and support the FAIRtax, make yourself familiar with the links below. We always do our best to keep our AFFT community up to date, and you can stay ahead of the curve using these convenient sites.
- The website of Americans for Fair Taxation (www.fairtax.org)
- Read the Summary of the Evasion Study
- Welcome to the Online FAIRtax Community (member.fairtax.org)
- The website at which you can help make it happen (bigsolution.org)
- The Facebook page for Americans for Fair Taxation
- The Facebook page for The FAIRtax Guys
- The Twitter page for Americans for Fair Taxation
- YouTube channel for AFFT
- YouTube channel for The FAIRtax Guys
- The Official FAIRtax Logo Store (www.fairtaxlogostore.org)
- POPVOX - Make your FAIRtax voice heard on this national self-survey platform
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