Written by Dan Busby
God, Government and Me—Money in the Church
Change continually occurs, but in the United States we are witnessing an era of greater change than we have seen in recent times. Many of these transformations are evolving in the first 100 days of the new administration. Many more will occur in the second 100 days, and that likely won’t be the end of them with Congress and the courts weighing in. As a prophet of the obvious, let’s look at a few of the areas where we can anticipate changes.
Inflation and the Stock Market
While inflation increases will be modest, stock market volatility could be a sleeper. Big changes in federal government policies will shake stocks. As the market ebbs and flows, it will be an anxious time for those in or nearing retirement.
It is likely that the Federal Reserve will begin to edge up interest after an 8-year run of low rates. While changes will not be significant in the short-run, borrowing costs for churches and ministries will probably increase over the long-term.
Tax reform has gone from a near-zero chance of passage to nearly 100%. Lower individual tax rates are likely. Itemized deductions, other than mortgage interest and charitable giving, could disappear, eliminating the double benefit of real estate taxes for ministers. The standard deduction could be doubled. Itemizers could fall from about 35% to 5% of all taxpayers. This means fewer people who attend your church will obtain tax benefits for their charitable contributions.
Repealing and replacing the Affordable Care Act is high on the list of priorities, but this will be a challenge to achieve. And, no clear pattern has been offered regarding what a new healthcare plan would include. One possible outcome of such reform is the establishment of a dollar limit on the amount of tax-free health insurance premiums that could be provided by your church under a group plan.
Ministerial Housing Exclusion
The minister’s housing exclusion (allowance) is at greater risk of being eliminated than it has been in recent years thanks to the Freedom from Religion Foundation (FFRF). One of their leaders paid income taxes on a designated housing allowance, claimed a refund from the IRS, and then sued when the IRS rejected the claim. This challenge is currently at the federal district court level. Stay tuned.
A federal judge issued a nationwide temporary injunction halting the implementation of the new Department of Justice overtime pay rules scheduled to go into effect last December. Although those rules may be dead, it is still a good time for churches to review who is covered and who is exempt under federal overtime rules. Also, be sure overtime is being paid where it is due.
Political Speech in the Church
In 1954, an amendment introduced by then-Senator Lyndon B. Johnson was adopted to stop leaders of nonprofit organizations from supporting or opposing certain political candidates. The impact of the Johnson Amendment has been to chill the freedom of speech of ministers, and it has given the IRS the right to examine what a minister says from the pulpit.
The Free Speech Fairness Act has been introduced in Congress. The legislation would allow ministers to say anything they wish about political candidates and social issues. The act would implement key recommendations made by the Commission on Accountability and Policy for Religious Organizations, a national commission formed by the Evangelical Council for Financial Accountability (ECFA).
A neighbor recently put in a new sidewalk. As usual, the workman interrupted the unbroken swath of perfect concrete with lines every few feet. What are these joints for? Well, all ground shifts. When it does, the concrete resting above it cracks in unpredictable ways, often ruining the entire job. But by intentionally inserting these lines, known as contraction joints, the concrete has a chance to absorb the shifting ground more effectively.
Likely, there will be much ground shifting in the days and months ahead. As the church, we need to stay aware of what may be coming and plan for it where possible.
Dan Busby is a certified public accountant and president of the Evangelical Council for Financial Accountability (ECFA).