I've long opposed the concept of religious freedom that suggests that ministers shouldn't have to pay social security taxes to the government on their incomes or get their housing provided without treating the fair rental value as income or that religious institutions should be allowed to discriminate against their employees in ways that other institutions can't. I'm obviously not in sync with Congress--which provides the "parsonage exclusion" and the Social Security exemption or with the Supreme Court --which found a ministerial exception allowing religious institutions to discriminate against employees as long as they had some kind of ministerial function (very broadly defined, apparently) or with many religionists in this country who think all this is hunky dory, as revealed by the hoopla raised by the right about the idea of employees of religious institutions being entitled to receive health care related to procreation. But ultimately the way the tax system subsidizes religion and the way our constitutional system has been interpreted to overtly cater to religion is a problem: it results in government affirmatively favoring religious over nonreligious ideas. I'm not sure that a nation that truly believes in religious freedom--for every religion and for no religion--could allow religious workers to be exempt from some taxes or religious institutions to violate its general laws.
So when I see news stories about the lavish lifestyles of families that run religious institutions like their own kingdoms (with inherited titles), I am even more convinced that we need to crack down harder on tax exempt organizations that pay for lavish lifestyles for their principals. The New York Times had an article on Saturday about the Crouch family, founders of the so-called "prosperity gospel" and Trinity Broadcasting Network and owners of twin sets of luxury homes paid for by their devoted followers and occupied tax free in their "ministerial" capacity and recipients of a luxury lifestyle provided to them as managers of a tax exempt organization. See Erik Eckholm, Family Battle Offers Glimpse Inside a Lavish TV Ministry, New York Times (May 4, 2012), at A1.
The cynic in me thinks they are ripping off not only their followers--prosperity for the gospel preachers and getting along as usual for the rest--but also the rest of us taxpayers in this great country of ours.
The family controls the network and just fired the granddaughter and her husband. Brittany Koper says the network has been engaged in all kinds of financial improprieties, and that it was a memo she wrote calling attention to the financial improprieties which got her fired, which of course the church founders deny. Koper has two pending lawsuits, and she accuses the family of stealing millions to buy real estate and cars, violating the IRS rules on tax-exempt organization "excess compensation" and maybe state and federal rules on false bookkeeping and self-dealing. The family pays itself with multiple luxury homes and vacation homes, corporate jets, and "thousand-dollar dinners with fine wines", all out of tax-exempt monies. The granddaughter is pretty convincing: "My job as finance director was to find ways to label extravagant personal spending as ministry expenses." Id. Since the governing board for TBN includes only members of the family, there's an assured lack of checks and balances.
And guess what--granddaughter's job as finance director made her a "minister" able to benefit from the payroll tax exemption and the parsonage provision. The TBN network pulled another stunt that demonstrates why the exemption for ministers from taxation makes no sense at all--it merely labelled scores of employees as "ministers"--chauffers, sound engineers, performers at the entertainment park (Holy Land Experience") and others all avoind paying social security on their salaries and are able to live in rent-free "parsonages". The suit by Koper alleges that the network provided "parsonages" for the founders' son Matthew and wife Laurie and separate houses for their adult sons, remodeled (at company expense) to include a putting green and indoor basketball court.
The Crouches claim "almost no personal assets" but essentially enjoy the benefit of all the assets of the tax-exempt organization and the luxurious lifestyle that affords them. While Janet Crouch remodeled the religious theme park, she lived in a suite of rooms in a luxury hotel in Orlando--renting a room for herself and one for two Maltese dogs and her clothes for two years, according to a former employee and the Crouch's granddaughter. The lawsuit claims that the tax exempt organization also paid for luxury dining for the couple and their son, running tabs of $300,000 apiece a year.
A representative of the company denies some of the stories and justifies others as part of the success of the ministry. The company representative also claimed that the granddaughter stole company money and was fired for embezzling, though there are no criminal charges outstanding. Her father Paul was also fired from the company.
Not sure what the answer is, folks, but we should recognize that the kind of subsidy we are now providing to various religious institutions is likely far from what the founders' envisioned and has little to do with guaranteeing religious freedom to individuals. Somehow we need to limit the scam of people making millions through tax exempt organizations, in the name of religion, and avoiding paying tax on the "parsonage allowance" just because somebody lalso enjoying that label agrees to lavel them a minister. Congress should just eliminate the Code provision providing the parsonage allowance and the Social Security exemption and that would solve a great deal of the mischief. Either through legislation or regulation we should require that every tax exempt organization have a majority of board members who are genuinely independent--neither members of the family of founders nor employees nor "ministers" but capable of standing up to power. For religious organizations in particular, because of the increased sensitivity to the idea of government audits and oversight, the rule should be that no "minister" of the church can serve on the board and the board must be elected by the members of the religious organization at large. As for the rest, it would take a constitutional overhaul to remove the "ministerial exemption" recognized by the Supreme Court recently for institutional discrimination against employees that are labeled by it "ministers".