This brief notice from WORLD magazine signals what could very well be the beginning of the end of the way of life assumed by countless evangelical congregations across these United States. The vast majority of Churches are small (under 100 members) and entirely self-supporting; even those which are part of denominations rarely receive regular budget support from broader ecclesial bodies. The clergy housing allowance tax exemption is a little-appreciated mechanism by which they're able to stretch their dollars a little bit further.
The housing tax exemption evolved as a way to level the playing field between Churches which provide parsonages for their pastors, and ones which expect the pastor to provide for his own housing. In the first case, the Church owns the pastor's house, and so the government does not tax it. In the second case, the monies paid to the pastor to enable him to pay rent or a mortgage (and the costs of maintaining a domicile) are not taxed. If this ruling in Wisconsin is upheld on appeal, Protestant clergy could lose their right to the housing tax exemption and congregations would have to have to pay them that much more to compensate for the additional tax burden. Yes, that would be only a few thousand dollars more a year. However, given the extremely thin margins of most Church budgets, that additional tax burden could easily put a full-time pastor out of the reach of many small congregations.
I've written at length on the implications of such a development for the Orthodox Presbyterian Church in my "Manifesto for the OPC." This court case may be the chink in the conservative Churches' dam against the rising flood of legal hostility to the cause of Christ. Remember: Noah built the ark before the rains began.
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