Taxation of Clergy

The Issue

The debate in South Korea centered on two questions: whether the honorarium a pastor receives from a church is taxable income, and whether the state may legitimately examine church finances.

Arguments in Favor of Taxation

• The principle of tax equity, under which every citizen pays taxes according to income.
• The teaching "Render therefore unto Caesar the things which are Caesar's" (Matthew 22:21) and the exhortation to pay taxes in Romans 13:7: "Render therefore to all their dues: tribute to whom tribute is due."
• Paying taxes makes church finances transparent and earns the trust of society.
• Reporting income allows low-income ministers to access welfare programs such as the earned income tax credit.

Some ministers and churches had voluntarily paid earned income tax even before the law took effect.

Arguments Against and Concerns

• Ministry is a calling, not employment, and an honorarium is not a wage.
• Taxing clergy income amounts to taxing a second time offerings that church members have already given from after-tax income.
• Tax audits could allow the state to interfere in the church, violating the separation of church and state.
• Most ministers have low incomes, so the actual tax revenue would be small.

The System as Implemented

A 2015 amendment to South Korea's Income Tax Act created a category of "religious worker income," which took effect in January 2018 after a two-year grace period. Religious workers may choose to report their income either as religious worker income (classified as miscellaneous income) or as earned income. Expenses for religious activities are excluded from taxation, and the scope of tax audits is limited to the records relating to the individual religious worker's income. For this reason, some criticize the system as preferential treatment compared with ordinary wage earners, while others regard it as an accommodation that takes into account the distinctive nature of the church.