wfn.org | ELCA Board of Pensions Backs 'Housing Allowance' Legislation

[News News <NEWS@ELCA.ORG>]

ELCA NEWS SERVICE

April 12, 2002

ELCA BOARD OF PENSIONS BACKS 'HOUSING ALLOWANCE' LEGISLATION
02-083-FI

     CHICAGO (ELCA) -- The Evangelical Lutheran Church in America
(ELCA) Board of Pensions is advising the church's pastors who claim part
of their income as housing allowance "to contact members of Congress to
prevent the elimination of this long-standing tax benefit" by supporting
legislation U.S. Representative Jim Ramstad (R-Minn., 3rd) introduced in
Congress.
     The "parsonage tax exemption," which has been on the books since
1921, allows clergy to deduct the portion of their income that goes
toward housing.
     The Church Alliance -- a coalition of 32 Protestant, Catholic and
Jewish benefits programs -- is backing H.R. 4156, Ramstad's bill to
maintain the exemption.  John G. Kapanke, president of the ELCA Board of
Pensions, Minneapolis, chairs the alliance.
     The U.S. Internal Revenue Service (IRS) challenged the amount of
money that a Baptist minister in California had deducted as his housing
allowance, saying it exceeded the "fair market rental value" of the
house.  A federal tax court ruled in favor of the minister, saying he
could claim "the amount used to provide a home."
     The IRS appealed the ruling to the Ninth U.S. Circuit Court of
Appeals in San Francisco.  In hearing the case, the appellate court
announced plans to review first the constitutionality of the exemption.
     Ramstad's legislation is "to amend the Internal Revenue Code of
1986 to clarify that the parsonage allowance exclusion is limited to the
fair market rental value of the property," making the appeal and any
further ruling in the case unnecessary.  Ramstad is a member of the
Republican majority on the Ways and Means Committee, which reviews tax
matters brought before the U.S. House.
     The ELCA Board of Pensions placed a "call to action" on its Web
site, sent e-mail to the church's 65 synod bishops and is mailing a
special newsletter to all of the church's pastors -- active and retired
-- asking that e-mail and letters of support for Ramstad's legislation
be sent to all members of Congress.
     "Not only would the elimination of the housing allowance be a
disaster for the 17,600 ELCA clergy, it would adversely affect the
entire faith community in the United States.  Ordained clergy of all
denominations would experience a tax increase if they are unable to
claim the housing allowance," said Kapanke.
     "If the housing allowance is ruled unconstitutional, clergy of all
faiths could face an immediate tax increase of $500 million or $2.3
billion over the next 5 years.  This would come out of a pastors annual
income, which, by many standards today, is already relatively low in
comparison to other professions," he said.
     Kapanke pointed out that the money to pay those taxes would most
likely be diverted from support for programs of all faith groups.
     The Church Alliance was formed in the 1970s and represents
programs providing pension and health benefits to more than 1 million
clergy, lay workers and their family members.  It "acts on behalf of its
members on legislative matters to protect church plans from unintended
consequences of legislative or regulatory requirements which are
applicable to secular plans," said Kapanke.
     "The Church Alliance is leading the effort to enact legislation
which would be intended to protect the housing allowance," he said.
-- -- --
     The ELCA Board of Pensions maintains a site at
http://www.elcabop.org/ on the Web.  A link to information about the
housing allowance and to the Board's "Call to Action" is located
currently in the Spotlight section, on the right side of the home page.

For information contact:
John Brooks, Director (773) 380-2958 or NEWS@ELCA.ORG
http://listserv.elca.org/archives/elcanews.html