Originally published on Forbes.com.
I was quite pleased to find that Professor Samuel Brunson led off his recently released book – God And The IRS Accommodating Religious Practice in United States Tax – with a discussion of the tax shenanigans of Kent Hovind. And then there is the part of the book that makes me wish I was on Breitbart and could lead with something like “ Professor Would Have IRS Apply Sharia Law To Accommodate Muslims ” , but we are talking about a serious treatise here, although, frankly, it is also a fun read if you have the right set of interests. In exploring the way religious beliefs have been accommodated or not accommodated in federal tax law, Professor Brunson takes us on a quirky tour of somewhat obscure parts of American history.
Expecting It Should Make Sense
Brunson’s thesis is that accommodations to religious individuals have been implemented in a random, haphazard manner without any sort of overarching system. The point of Brunson’s survey is to demonstrate the “ad hoc, reactive lawmaking” that has created existing religious accommodations in the tax law. From there he goes on to suggest a rational rubric and then apply that rubric to a number of situations that might call for accommodation.
I have a sense that Brunson’s quest is somewhat quixotic, but you can always hope. Over the next couple of years bright lads and lasses in law school may read Brunson’s book. The brightest of them will be clerking for Supreme Court justices in a few years when the parsonage exclusion litigation now before the Seventh Circuit makes it to the big leagues. With just a little bit of luck the “Brunson Rubric” might then make its way into legal history.
Well Crafted
God And The IRS is well crafted to be appreciated by anyone interested in the intersection of religion and taxation. I realized that as I was finding parts of the first two chapters a little tedious and it dawned on me that not too many people read as much about taxes as I do. Chapter 2 Making the Tax Law is actually quite good, I was just impatient to get to the part about Kent Hovind.
Chapter 3 – Accommodation in the Intersection of Religious Practice and the Tax Law – explains the problem that accommodations are designed to address:
When religious actors are taxed, their religious practice sometimes becomes subject to the intrusive oversight of the IRS. If, however, the legislature chooses to exempt religious actors from taxation, the IRS must police the borders of that exemption. Either way, religion becomes entangled with the state.1 Not all of these entanglements implicate the Religion Clauses of the First Amendment, of course; a religious taxpayer who claims no religious objection to taxation is subject to intrusive oversight, but it is the same intrusive oversight as nonreligious taxpayers. The oversight has no religious significance. Still, some entanglements between tax and religious belief or practice do represent a burden on individuals’ religious beliefs or practices. And when the tax law impinges on an individual’s religious beliefs or practices, the government must decide how to resolve the conflict.
The succeeding chapters detail a number of ways that religious issues have been accommodated or not. What do you do with people who have taken vows of poverty? Real ones that is. Why do we let “ministers of the gospel” exclude cash housing allowances? How do you distinguish between purchases of services and contributions to a church? (Of course, there was a discussion of Scientology, of course). Is tithing part of your basic living expenses, that IRS collections should consider?
Chapter 6 is where we get into sharia. Islam forbids charging or paying interest meaning Muslims who, for example, want to pay for a house over time cannot take out a conventional mortgage, which would involve paying interest. Where there is a will, there is a way and where there is demand there is supply. So banks have provided sharia- compliant mortgage-equivalent instruments. Although there are subtle variation in them, they are essentially lease purchase arrangements that would probably be considered purchases under Generally Accepted Accounting Principles. The tax law rules about form over substance only apply when the IRS has it in for you. Other than that you are stuck with your form, so Muslims engaging in economically equivalent transactions don’t get to deduct what they don’t want to call interest.
Chapter 10- Religious Communitarians is worth the price of a admission – (For the Kindle version that is. The hardcover price over a hundred bucks is really kind of ridiculous). It reminds me of an observation in what I think is the best short story in American literature – Eyes To See by James Gould Cozzens, which is included in Children & Others. The narrator is recalling being introduced to a cousin who was raised in an alternative community around the turn of the century –
American history courses at school had taught me that William Penn and was a Quaker. Quakers did not believe in war …………
But of Mother Ann Lee and the Shaker communities I had never head. I had never heard of Perfectionists or Bible Communists; ……. Fourierism, or of Robert Owen’s New Harmony; of Millerites or Rappites;
About Those Hippies
The dropping of the variety of paths not taken from conventional narratives of American history might account for this observation by Professor Brunson
Communitarianism in the United States diminished as the twentieth century progressed, but it saw a resurgence in the hippie movement of the 1960s (though it is not clear whether they knew about the long history of religious communitarianism or if they believed they were creating something new). Today, US communitarian groups run the gamut from Christian groups to intentional communities built around retirement.
From his bio Professor Brunson graduated from Brigham Young University in 1994, so it is likely that he never observed an actual hippie in the wild. I checked out his observation with my covivant, whose hippie credentials are much stronger than mine. After finishing up in the Peace Corps and homesteading for a while, she lived in an intentional community for many years before finding her true calling preparing tax returns for high net worth individuals. She did not totally contradict Brunson’s speculation that Age of Aquarius communities did not realize their movement had a history, but would modify it just a bit.
The Rubric
All of this is leading up to what I will now call the Brunson Rubric which is explained in Chapter 11. There are three questions to consider:
1. Does an individual’s religion cause them to act in a tax-disadvantaged way?
2. If so, what type of accommodation would put them in a similar after-tax position as other taxpayers without the same religious constraints?
3. Are there extrinsic reasons that the tax law should not provide that accommodation?
He then applies the rubric to a variety of contemporary accommodations either proposed or extant. It is no surprise that he comes down hard against the cash parsonage exclusion, which is currently being litigated. CBNNEWS in an article by Amber Strong characterizes the controversy as Churches Fight Atheist Lawsuit the Could Result in $1B in Taxes on Church Leaders. Brunson writes on it:
The very existence of the parsonage allowance discriminates between clergy and nonclergy. Instead of addressing religion in a consistent way, grounded in tax policy, the development of the parsonage allowance and its subsequent expansion demonstrate the ad hoc and reactionary nature of the legislative processes surrounding religious taxation.
Perhaps it is a bit of a surprise that the Brigham Young University graduate and blogger on Mormon issues thinks there is a problem with those earnest young men and women with black nameplates not being taxed on their support when it is funded through tax-deductible deductions. What does merit accommodation in his view is some interest deduction equivalent for Sharia-compliant financial instruments. Well there you have it tax the mega pastors of the mega churches and those very polite young men and women, to give a break to the Muslims.
My biggest disappointment is that in his discussion of religious communities where members have a vow of poverty, which he sees as deserving the accommodation they are allowed, he does not probe deeply into the Catholic religious orders. My sister who had taken a vow of poverty that I can assure you was quite real had a store of innocent Catholic jokes that she would share with me. One of them was a list of things that even the Pope didn’t know which included how much money the Benedictines have. Somehow they and the Jesuits among others have managed to stay off the radar of the Freedom From Religion Foundation.
All in, I highly recommend God And The IRS, even though it is pretty much the book that I wanted to have written, which would have had the even catchier title What To Render Unto Caesar. I really hope that the Brunson Rubric becomes a thing when accommodations to religion in the tax law are considered. The way the parsonage debate is going, though, I am not real optimistic.
Other Coverage
Virginia Jerker has written about the collision of US Tax Law and Sharia. You can download that here.
The introduction to God And The IRS can be downloaded here.
The Tax Prof features some brief reviews including one by Adam Chodorow.
When and how should the tax system accommodate religious practice? Samuel D. Brunson does a great job tackling this important but difficult topic, addressing some of the most common ways in which conflicts arise and offering a framework for deciding future cases. This book should appeal to anyone interested in tax law, religion, or both.
Professor Chodorow wrote me specifically about the parsonage section of the book.
The book does a wonderful job laying out the history of the parsonage exemption, clearly describing how the exemption has evolved over the years. The exemption raises both tax policy and constitutional questions, and Brunson addresses both without getting deep into the weeds on either. Brunson concludes that the exemption is both bad policy and unconstitutional, a view that I share. The government and intervenors have just filed their briefs with the 7th Circuit, appealing the District Court’s ruling holding the cash allowance provision to be unconstitutional. Those interested in getting into the details of the constitutional argument should definitely check out those briefs, as well as those of the plaintiffs, which will likely be filed in about a month. At the risk of self-promotion, those interested in a deeper look at the tax policy and how the exemption and others purportedly similar provisions operate within the tax code should check out my article, The Parsonage Exemption, available at here.