Tax exemptions for rabbis who serve a community have a long history. A story about Rabbi Judah the Prince (Yehuda HaNasi, a wealthy leader of the second-century Sanhedrin who was simply known as “Rabbi”) illuminates the situation: “When Rome imposed a tax on Tiberias, the mayor came to Rabbi, asking rabbis to share the burden. When Rabbi refused, the mayor threatened that the townspeople would flee to escape financial ruin, thus leaving the rabbis to pay the tax on their own. Half the townspeople fled, and Rome halved the levy. The remaining townspeople pleaded with Rabbi to contribute. When he refused, they, too, left the town. Rome put the full burden of the levy on the single remaining lay person, who then fled. With only rabbis remaining, Rome canceled the tax.” (BT Bava Batra 8a)
Although Rabbi was wealthy and the Jewish community anticipated suffering under an oppressive tax, he refused to share the burden, insisting that this tax did not apply to rabbis. His gamble paid off; Rome, like other empires, did not tax religious leadership. The same section of the Talmud discusses an internal tax collection to build a city wall, exempting rabbis from this tax, reasoning that rabbis did not need the protection of a city wall, since learning Torah protected them. For communal wells, however, rabbis could be taxed, because even they needed water.
This discussion implies that taxes are levied based on the services that particular citizens require. The Talmud is ambivalent about rabbis being paid for their work at all,1 so a rabbinic tax exemption could acknowledge that rabbis — without other means — could be impoverished by taxes. The other group exempt from taxes in this discussion is made up of orphans, who are among the most vulnerable in society.
In the United States, we citizens do not opt in or out of paying taxes based on whether we think we benefit from specific government services. And yet, our tax commitments depend on complex formulas of credits and deductions that factor in who we are and how we spend our money.
The ministerial housing (or parsonage) exemption allows U.S. clergy to pay all expenses related to their housing (mortgage or rent, furniture, utilities, and maintenance) from tax-exempt income. This exemption has an interesting history. In 1791, all religious institutions were granted tax-exempt status — considered an essential part of disestablishment. In 1921, that exemption was extended to ministers, who were given a tax exemption on the portion of their income they received in the form of housing from religious institutions that owned parsonage houses. In 1954, clergy who rented or owned their own homes gained access to the same benefit.2 So, for example, a rabbi who pays $1,500 per month in rent or mortgage, as well as an average of $100 for gas and utilities, and who has monthly expenditures of $400 on upkeep and furnishings would designate $2,000 of his or her monthly income as parsonage, paying no income tax on that portion of income. Recent legal briefs have challenged this exemption.3 It seems that this loophole would be easy to close, and could return as much as $1.2 billion a year of U.S. taxpayer money to the federal budget.4
Defending the deduction, Texas attorney Frank Sommerville has argued that clergy, like members of the armed forces (who have a similar housing deduction), must live in the communities they lead, regardless of the desirability of the place or home. They use their homes to serve those communities, and oftentimes are vulnerable to sudden relocation if a contract is canceled.5 While clergy are not alone in serving fickle organizations, few other types of work make employees’ homes an essential feature of their employment.
If I were writing the tax code from scratch, it would be straightforward, progressive, and easy to calculate. I would abandon the complex system of deductions that encourages finding ways to avoid paying, rather than cultivating the understanding that what we contribute is in our greater interest. Our taxes sustain our infrastructure and our society, allowing us to enact a broader, bolder vision than we could as individuals.
But as we wait for tax reform (and the Messiah), the moral obligation to discern reasonable use of the parsonage exemption sits with rabbis and our communities. Rabbis’ homes are gathering places for meeting, learning, counseling, and ritual that knit together religious communities and strive for transformation in the world. Rabbis’ homes are an essential asset for the community, far beyond the personal use of their families. But taxpayers and society at large pick up the tab. And so, within the legal framework of the parsonage exemption, personal ethical discernment is required.
Rabbis and the communities we serve benefit from this exemption; we thus have an obligation to serve the larger society — beyond our own communities. Perhaps we could serve as volunteer chaplains, or help with disaster relief, or organize for social change, using our rabbinic training for the greater good. Rather than assume we deserve this exemption, we should work to align our personal and organizational priorities so that we contribute commensurately with the benefits
society affords us.
1 For example, see Bechorot 29a and Avot 4:6.
2 Justin Butterfield, Hiram Sasser, and Reed Smith, “The Parsonage Exemption Deserves Broad Protection,” Texas Review of Law and Politics, Vol. 16, 254-256
3 Andrew Seidel, “The Unconstitutionality of the Parsonage Exemption,” Forbes.com
4 Ryan T. Cragun, Stephanie Yeager, and Desmond Vega, “Research Report: How Secular Humanists (and Everyone Else) Subsidize Religion in the United States,” secularhumanism.org
5 Frank Sommerville, “In Defense Of Special Tax Treatment For Clergy,” Forbes.com
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Thanks for starting the conversation, Emma. I’d love to hear how other Rabbis handle parsonage.
Because it did not feel right to me, I decided not to claim it when taking my position as a Hillel rabbi. Ironically, I actually do use my home more and more these days — to host shabbat dinners and Jewish holiday festivities for students, most recently a Tu biShvat seder and Purim party. Perhaps I’m being naive, but it feels like a vestige from a time when clergy played a different role in American society and I’m not sure why I should be the one to benefit. Friends and colleagues have criticized my choice, on the grounds that if I am allowed a tax break, I should take it, even if it seems strange. But that argument does not feel strong enough to me, and I continue to struggle with why clergy should have this break when others also use their homes for work.
I wonder how many other rabbis do not claim parsonage - I’m not the only one, right?
This is a great topic, and one that has fascinated me for a long time as a legal scholar. The theory behind the parsonage exemption, though, has an important wrinkle.
As a matter of general tax law principle, employees who are required to live in employer-provided housing for the benefit of the employer aren’t taxed on the value of that benefit. Lighthouse keepers are the classic example (if there are any left). Under this principle, some clergy (such as Catholic priests who live in rectories) could claim a “parsonage exemption” even without any special statutory provision for clergy.
American legal and political tradition, though, tends (not always but often) to dislike treating different religious groups unequally simply based on their different theological beliefs or ecclesiastical structures, even when that unequal treatment might be rationally justifiable. So Congress extended the parsonage exemption (which Catholic priests and some other clergy would get automatically simply based on general tax law principles) to other clergy.
The point of the exemption, in other words, is not mainly to favor religion but to avoid an uncomfortable potential inequality. I can cite a fair number of other examples of this fascinating instinct for religious equality working in the law.
(Whether this might make Rabbi Moore feel any more inclined to take the exemption is for the Rabbi to decide.)
Perry Dane
Professor of Law
Rutgers School of Law