Random Mormon Poll #11: Net or Gross?

In a letter from the First Presidency dated March 19, 1970, the brethren wrote:

The simplest statement we know of is the statement of the Lord himself, namely, that the members of the Church should pay ‘one-tenth of all their interest annually,’ which is understood to mean income. No one is justified in making any other statement than this.”

I am interested to know your views on tithing and if you pay on the net or gross and why.

The poll is completely anonymous and M* does not have access to IP addresses for those who vote. Also, if you wish to leave an anonymous comment, you may do so (valid email address required) and your anonymity will be protected.

Any comments that attack the Church and/or its leaders will be promptly deleted.

50 thoughts on “Random Mormon Poll #11: Net or Gross?

  1. This post ignores some of the real issues with paying tithing.

    For example, if you pay 1/10, how do you handle money you put in your 401k? Do you pay on your gross income including your 401k (or IRA) investment, then pay again when you receive that money, or do you keep track of how much you put in vs how much interest you earn over 40-50 years? How about Social Security? If you receive social security and you paid tithing on your gross income, do you pay again for social security income? Is it even possible to calculate at that point what is earned vs what is returned?

  2. Since I don’t expect to live long enough to collect as much social security as I’ve paid I don’t intend to pay tithing on social security. But then again, maybe my health and the social security trust fund will surprise me ….

  3. Is it even possible to calculate at that point what is earned vs what is returned?

    Your general point about possibly paying tithing twice on retirement income is valid, but only because people don’t understand the issue, not because of computational difficulties. SSA sends you a statement every year that tells you exactly how much you contributed to the system. Once your cumulative benefits exceed that amount, you are into untithed territory. Oh, and since virtually nobody counts employer contributions in their gross during their working years, they should not be included in the calculation of untithed benefits.

  4. Good idea for a poll Brian. A very interesting issue. It is an especially difficult one for people who have alimony payments (do you pay on your gross even if you are making a large alimony payment to another family?) or other large financial obligations. My bishop once told me, “try to pay gross as much as you can, and you will see the blessings,” and it has been true in my case.

  5. I pay on the gross, then when I get a refund in my taxes, I do not pay tithing on it.

    It gets more diffivult when computing ivestment gains. I have not had to deal with it much.

  6. During the 1940’s, high-income earners were taxed at rates reaching 94%. In that case, it would hardly make sense to pay 10% of gross income, since you would be left penniless. In today’s “hate-the-rich” mentality, we’re kinda headed in that direction again.

    This same phenomenon is common in other countries where gross pay severely dwarfs net pay as a result of overbearing local and federal taxes.

    Personally, I do not consider any pay “income” unless dollars and cents enter an account that I control (including IRA, 401k, etc.). Thus, I would typically tithe a tax refund, if I were to get one.

  7. I used to be really big on paying gross, then I slowly came to realize that money was being taken for me without my consent for government programs that I don’t agree with and will never see the benefit of, so how exactly is that part of my “increase”?

  8. Pay on the net and then pay 10% of any tax refund. Three reasons:

    1) It just feels weird to pay 10% of a number that exists only on paper. My paycheck shows up in my bank account, minus taxes/deductions, and I pay 10% of whatever that number is. I throw in a few extra bucks to cover my insurance benefits, and consider myself done.

    2) It seems to be fairly well-known that in Scandanavian countries, where tax rates can run very high, the LDS Church doesn’t give anyone grief for paying on their net income. If it’s okay there, why not here? I did the math once and determined that paying 10% of my gross income is roughly equivalent to paying 18% of my net income. That strikes me as ridiculous.

    3) You only “get the money back” on your taxes if you make under a certain amount of money and have over a certain amount of children. Neither of those situations apply to our family (yet) and we most certainly do not “get it back.” So treating tithing as a sort of temporary loan to the Lord doesn’t make good fiscal sense for us.

  9. And re my #3 reason above: yes, strictly speaking tithing doesn’t make “good fiscal sense.” And yes, “If the Lord asked for 100%” blah blah blah. The Lord doesn’t ask for 100%, he asks for 10%. If He wanted my family to be even more cash-poor than we already are, then He’d ask for us to be that way. Believe me, between our mortage and student loans and the kid on the way, even that 10% is a pretty painful cut.

  10. “If you only want ‘net’ blessings, pay on the net. However, if you want GROSS blessings, by all means, pay on the gross.”

    What are “GROSS” blessings, exactly? Is that like when you get a brand new car for free, but it perpetually smells like someone farted in it? Do the windows of heaven open up and dump green slime?

  11. I really like the fact that the church does not ask to see our tax forms to verify that we are really paying 10%. (Although I have heard of a few situations . . .)

  12. Not that the poll is scientific, but I am still surprised by the overwhelming response for “gross.”

    I pay what I think is honest, and I totally reject the “If you only want ‘net’ blessings, pay on the net. However, if you want GROSS blessings, by all means, pay on the gross” concept.

  13. This doesn’t answer all the questions people have, but my husband’s justification for paying the gross is that you are still benefitting from the taxes you pay, even if the money doesn’t go directly to your pocket. Of course just how much you benefit is a political issue, but no one can deny we get some benefit from having a functioning government. Well, unless you’re on the more extreme end of libertarian thought, but I have a hard time believing I’d be happier living in anarchy. :)

    Now that my husband has a good job, we have to answer the question if we also pay tithing on the benefits his employer pays, since some of that shows up as a monetary value on the statement. It’s kind of a hard question because between that and paying gross it would be quite a bit more than 10% of the money we actually bring in each month. For now, we’re just paying gross income before taxes (not including benefits paid by the employer), but I do wonder sometimes if we aren’t slacking on this issue.

  14. Matt W, With regard to 401K, social security, and the like. I don’t think anyone expects anyone to pay tithing on their income twice. So there are two ways to handle this:

    (1) Pay tithing on employee contributions to 401K and social security now. When social security benefits are received pay tithing on half, corresponding to the portion contributed by your employer. Pay tithing on all 401K withdrawals that exceed net personal lifetime contributions.

    (2) Don’t count 401K contributions and social security contributions as income now, pay tithing on it when benefits/withdrawals are received later.

    FWIW, I have had bishops or other leaders confirm on multiple occasions that the Church has no official policy on the gross / net thing. I did have one bishop who didn’t like people deducting net losses, which to be fair, implies a consumption tithing system rather than an income tithing system.

  15. When I first received paychecks as a teenager, I tithed the net pay. I don’t know exactly how that changed, but I think I must have been swayed by the argument that I receive benefit from the money I pay to taxes, because I’ve tithed on gross pay at least since my mission. (I therefore don’t tithe any refund.)

    I tithe on my gross pay, after subtracting the amounts I’m putting in retirement accounts, which I’ll tithe when I finally withdraw them. I hadn’t thought about the social security, but I like the idea of tithing the eventual payments to the extent I didn’t already tithe. I would feel weird at this point leaving social security out, though, since I’ve been counting it for so long, and if I’m paying a little MORE than necessary, I don’t see how that’s a bad thing. (However, I do heartily dislike that “gross blessings” platitude.)

    On the other hand, I feel no inclination at all toward tithing my benefits. The employer retirement contributions I can of course tithe when I eventually withdraw them 30-35 years from now. As for health insurance benefits, I don’t care if someone has been able to monetize them, I just can’t see them as anything other than potential benefits that may never be fully actualized, and in my current job, the benefits are large enough relative to my (therefore lower) salary that tithing them would be a hardship. But they are a benefit, an “increase”, so I could be wrong. Ah, I’ll let my social security overpayment cover my health insurance underpayment, and everyone’s happy!

    You know, I just had a weird vibe like I’m splitting hairs too much, like a Pharisee with his “mint and anise and cummin”…

  16. Wow, I’ve never given it a whole lot of thought, I guess, because it never occurred to me to tithe my benefits.

    I’m having one of those moments where I get overwhelmed with our doctrine and think “AUGH I AM NEVER GOOD ENOUGH!” I have these moments sometimes…

  17. Duke of Earl Grey, nothing seems to bring out the Pharisees like the subjects of tithing and Word of Wisdom. I’ve decided that both are between the individual and the Lord. The commandment is to tithe. The details are left up to the individual. In the WoW, there are a few specifics and the rest is left up to the individual. If you feel like you’re splitting hairs, maybe you should ask Father what you should do.

  18. @Jana

    No need to feel overwhelmed. In the end, I don’t believe we will be judged on the net or the gross. If you want to feel overwhelmed, go to the post office and help sort mail. ;-)

  19. @Matt W.
    I take some cues from tax laws. My approach has been to pay tithing on what goes into the 401K or the IRA, and then when it comes out I’ll worry about the income made through interest. It doesn’t always make sense to use tax principles in tithing, but in this case it works okay and makes some of the math easier.

  20. @Brian DuffinI agree. I actually had a crisis of faith over net vs. gross when we got our “real” jobs after school and were suddenly paying more in tithing than our entire student paychecks used to be. My friend/spiritual guide said, “Look dude, just pay 10% of SOMETHING. It’s all a sacrifice, and I have a hunch that God’s not so picky.”

  21. I pay on gross income and don’t worry about the others. I do not want to talk about taxes in the afterlife…

  22. I’m just glad I’ve never had a bishop like the minister on The Simpsons: “Once again: tithing is 10% off the top. That’s gross income, not net. Please people, don’t force us to audit.”

  23. Mike,
    Although I’m indifferent to whether you pay on gross or net (and I realize your politics run toward Ron Paul), you mischaracterize taxes in a huge way; although you may not benefit from every dollar of tax money spent, you undoubtedly receive certain benefits out of proportion to the amount you pay. Those benefits may be invisible, but nonetheless they exist. These benefits include infrastructure, a court system that makes contracting viable, government development of technologies that later go into the private sector (including Tang and the Internet).

    You could certainly try to calculate the value of the benefits you receive, but positive externalities from government programs benefit you, and society has to absorb the costs of certain negative externalities that are caused by you (and by me and by everybody else).

    Not that I’m suggesting that you have to tithe 10% of the cost from your actions that you’re not forced to bear because you spread it around to society in general. Although that would be kind of cool.

  24. Here’s a Pharisee-type question: Is _green_ tea against the Word of Wisdom?

    It’s still from the same plant as _black_ tea, it just hasn’t been fermented.

  25. Sam B., Along the same lines, *every* citizen should gladly submit to punishment if duly convicted, after possible appeals are exhausted, even in error. The reason why is that the benefits of living in a society of any kind are so great that existence as a individual, alone and apart from society, is nearly inconceivable.

    And furthermore, a criminal justice system of some kind is required for every society, to the degree that one’s very existence as a civilized human being is contingent its function. So one can go to jail content in the knowledge that further resistance is the sort of thing that would cause civilization itself to cease to exist. That is the ancient Greek perspective, more or less. Socrates set the ultimate precedent along these lines, I believe.

  26. Pingback: Tithing Us » The Millennial Star » Random Mormon Poll #11: Net or Gross?

  27. We tithe on gross, but honestly I hadn’t given it quite so much thought as all this (401Ks? Social Security? Health benefits? Services from tax dollars?). I just figure it doesn’t hurt to have a generous attitude.

  28. My husband (an economist) and an LDS colleague surveyed 1200 Church members in the mid-1990s, asking this question and several others about tithing practices. They turned the results into two research papers, which you can read here and here, if you are interested.

  29. I always paid on gross. As I come to understand how the law of tithing was originally intended by Joseph Smith, though, I think I overpaid.

    At any rate, the Church will never get another dime of my money.

  30. We pay on gross, but don’t pay again on a tax refund. I’m not sure what we will do when we start drawing on IRA/401k/SS (ha ha) in 30 years. Right now, we are not paying tithing on interest income, so I’m not sure if we would pay on retirement earnings.

    We also don’t pay tithing on severance pay or unemployment insurance, something that came up recently when DH lost his job. When we discussed it, it seemed like paying tithing on unemployment insurance would be like paying tithing on homeowners insurance if our house burned down and we got a payout. We did pay tithing on his back pay and remaining vacation pay.

    As for gifts, we generally don’t pay tithing on that, but we do increase our fast offering.

  31. D&C 119:4
    and after that, those who have thus been tithed shall pay one-tenth of all THEIR INTEREST annually; and this shall be a standing law unto them forever, for my holy preisthood, saith the Lord.

    PROPERTY/(Personal) INTEREST
    :an interest in freedom from governmental deprivation of property and sources of financial gain (as employment or a government benefit) without due process; broadly : something (as a job or benefit) to which one has a legitimate claim of entitlement and that cannot be taken away without due process as distinguished from the unprotected object of a need, desire, or expectation

    LUKE 18:12
    i fast twice in the week, I give tithes of all that I POSSESS.

    DEUTERONOMY 14:22
    thou shalt truly tithe all the INCREASE($$$) of thy seed(bank account), that the field bringeth forth year by year.

    It seems to me that you pay tithes of what you have/possess. This leads me to believe that it’s fine just to pay on whatever your increase it. From what I know, my increase isn’t my gross, but it’s my net and benefits. I also believe that gifts are an increase of what you possess.

    I’ve actually been paying Gross since 2005, but recently I’m wondering why I’m paying tithing on the $$$ that I dont have in my bank account. I don’t possess whats being taken out of my gross earnings. It’s not an increase, unless it comes back as a tax return, which is hardley ever for me.

    I think I’ll be switching to tithing on the net and just tithe all the increase $$$ I get. This way I will be able to donate more to fast offerings and missionary funds. I would feel a lot better doing that.

    Just sayin.

  32. I read an artice ‘This thing was not done in a corner'(google it!) Where President Hinckley was asked the specific question “You (and your church members) pay tithing on 10% of your gross income?” President Hinckley did not deny that, this brought the issue to the forefront of my mind, so I took it to the temple and recieved my complete answer there through prayer, I would recommend this process to everyone so you can know for Yourself what is right for You!!

  33. I use to pay on gross and then on net. Now I pay according to the “standing law” given in Section 119. I pay on my interest annually. If you look up the meaning of the word “interest” in 1828, you will find it means “Surplus advantage.” Abraham paid tithe on that “…which God had given him more than that which he had need.” JST Genisis 14:39
    I think it is important to pay an honest tithe. Once the windows of heaven were opened to me, I could see the truth about tithing, among other things. God was telling me one thing and I was doing another thing. He did not promise me any blessings for paying more than he was asking in tithing. I was simply returning the gifts he intended me to use for the benefit of my family and for the benefit of others through me. I have since repented. Now that I understand this, I cannot be so rude and foolish by returning God’s blessings beyond what he asks me to return. I can and do make offerings above my tithing but I also understand a proper tithing and don’t burden my family with giving away money that should be used to pay for our reasonable needs.

  34. Wow, I didn’t realize you had to be a professional accountant to obey the commandments. I guess with great knowledge comes great responsibility, or something… Lots of interesting points here. I think if people want to pay gross, that’s great – I’m sure they will be blessed. But like someone mentioned, sometimes people are taxed at 90 % or above, so that would hardly work in all cases. I like the “anything that goes into my bank account” concept, personally. As far as taxes benefitting you – is probably true, but if you follow that logic with tithing, what about people who are out of work and receive no income. Should they still pay tithing on the benefit of having a government? The situations that I feel conflicted on are when you receive money as a consultant. I get a check with no money taken out, and I don’t like to wait until the end of the year to settle up on tithing, so I tend to pay tithing on gross in those situations. But then at the end of the year, when I end up paying my taxes on that money, I would feel a little weird about “taking back” some of the tithing money already paid – whether through not paying as much on future income or what not. Maybe that’s just my healthy LDS sense of guilt kicking in… I think the bottom line is what the leaders have always said – the Lord doesn’t need our money, this is more for our benefit. So make the choice that makes you happy

  35. As a youth, I believe I only paid on my net earnings. However, once I entered adulthood, I thought that it might be better to pay on my gross income. Here’s some of my justifiction for this.

    I’ve read a few posts regarding ‘increase’ and then stating why they pay only on ‘net’ because they never see an ‘increase’ in their bank account. I’m not criticizing anyone for this rationale, but I choose to see it differently.

    It might be pertinent to mention that I am completely against the Social Security / Welfare / Entitlement system in our country today. I have no choice whether or not I pay *into* the SS system. However, I do have a choice whether or not I take *out of* the SS system. Once I reach the ‘appropriate’ retirement age, I will not be retiring nor will I be collecting Social Security benefits (by choice). I only mention that to demonstrate that I will never see an ‘increase’ due to any contributions into the system.

    Despite knowing that I will never see an ‘increase’ from my withholdings, I still pay tithing on my gross. I try to consider all of the non-monetary increases that come from my withholdings.

    1) My children’s education is paid for with my withholdings.
    2) I have roads/bridges/rail to help take me from place to place.
    3) I have access to a county hospital / EMS services.
    4) I have police / fire protection.
    5) I can take my children to numerous city / state / federal parks.
    6) etc.

    Additional increases not seen in my bank account are:
    1) My employer pays the majority of my health insurance premiums.
    2) My employer provides a pension at no cost to me.
    3) My employer contributes to my 401-K plan.
    4) My employer pays for my continuing eduatation.
    5) etc.

    These benefits from my employer are not typically seen on a bank statement, but they add an additional 30% to my increase. One previous poster stated that, if he were to pay on his gross income, his tithing would be closer to 18% rather than 10%. As I see it, even if I pay on my gross income, I’m still seeing an increase far beyond the 18% that was claimed earlier. Those of you who are self employed certainly know how much additional increase you would need to see in your bank statement to compensate for company-provided insurance, pension, 401-K, etc.

    Despite what I would call empirical evidence to support paying on my gross, when it comes right down to it, I’d rather play it safe than sorry. By that I don’t mean that I think I would be punished in any way (by God or man) for only paying on my net. What I mean is that, I don’t want God to have to decide whether he should bestow net blessings or gross blessings upon my family. I want there to be no doubt that I’m grateful for everything that he has given me, including the blessings that never appear on a bank statement. And, if I should happen to pay more than the minimum required, I’m OK with that. I always try to give my family, employer, friends, etc. more than the minimum required and I certainly won’t complain when the Lord does the same for me.

    I certainly don’t want anyone to think that I’m criticizng them for their personal convictions/beliefs. This is simply how *I* have chosen to approach the subject of tithing and increase.

    To be perfectly honest, I look forward to the day when I can return 100% of my increase to the Lord by following the law of consecration knowing that, should anything happen that prevents me from taking care of my family, their needs will still be met because I have done everything within my power to do so but still fell short. After all, isn’t that the entire basis for the gospel of Jesus Christ and His atonement?

  36. However, if you want GROSS blessings, by all means, pay on the gross.

    Who would want gross blessings? Especially if they are capital-G gross?

    ;)

  37. Grim-a-dera I think you skipped part of the verse.

    JST Genisis
    39 Wherefore, Abram paid unto him tithes of all that he had, of all the riches which he possessed, which God had given him more than that which he had need.

  38. We don’t pay on social security or IRA deductions. We’ll pay on them when we receive it. Otherwise, it’s on gross. I’m starting to think Net would be better.

    It’s an attitude of obedience the Lord seeks. A person who feels they are paying a full tithing is paying a full tithing.

    Or we can go all nutso about it. Like those OCD people who try so hard to obey the exact letter of the law that they totally lose the spirit.

    Actually Bill and I spoke about this just last night. He has a friend who was on a mission in one of the Scandinavian countries and he remarked that tithing is problematic for them because the government takes so much out of their taxes. More and more, especially as the church goes, we need to apply a relative standard in many areas of our worship to maintain our serenity, spirituality and sanity.

  39. My wife and I have been students for 10+ years, and we are in $300k+ of debt. Thanks to the government, student loan interest rates are between 6.8% and 7.9% – something I am not excited about. Sadly, we cannot deduct money that we earn that we use to pay towards student loans = all of our loans are paid AFTER taxes. I believe in the principle of tithing, but I also believe in the principle of being self-reliant and financially stable. Does anyone feel that I would be wrong to pay tithing on income that we have at our discretion, AFTER student loan payments had been paid (on a monthly basis)? It seems small, but makes a big difference when you consider how much money is accruing due to interest. My thought is that the Lord wants me to get out of debt so I can sustain my family, and then have the ability/freedom to pay on gross/net or whatever I feel is actually my “increase”?

    Thoughts from other students with this problem or others?
    Thanks

  40. Blake, I think most people would hesitate to give you advice on this situation because it really is between you and the Lord. I had some complex questions about tithing, and I asked my bishop and he said: “Please pray about it and do what is best for you and your family. The Lord asks for 10 percent of our increase, which most people interpret as 10 percent of your gross. There may be situations where that is not appropriate, and you have to decide.”

    I can tell you that when I pray about such things I immediately get a feeling about what is right and what is not, so this is what I would suggest you do. Good luck. $300k in student loan debt makes me want to cry, by the way.

  41. I’d just add that the principle would seem to be are you paying in such a way because you are organizing your finances and minimizing your tithing payment, etc. in order to “get gain” (“gee it sure would be nice to have the extra money to do XYZ, perhaps we should pay on net or deduct this expenditure from our income.”)? Or on the flip side, have you made (or are still making) terrible financial decisions in order to be more comfortable (nice car, vacations, buying lunch everyday, etc. etc.) that is putting you in needless debt?

    If a person has placed themselves in bondage, whether it’s spiritual bondage, or in debt from poor decision making, the only way out is to turn to the Lord as we make use of our agency to humble and sanctify ourselves. In that case, I would be hard pressed to think the best way to sanctify myself is to convince myself that I can’t consecrate what I have.

    However, the flip side is just as real. If a person is in financial bondage as a result of necessity (or government requirement), and is already living a humble life and not spending money frivolously, then I do not believe the Lord expects us to ruin ourselves in order to satisfy the demands of the law. But that really is a tricky exception that needs to be considered carefully.

    Either way, I don’t think hellfire is coming down, or one would be condemned as unrighteous. But I do think we often give up many opportunities for personal growth, and in increase of the spirit in our lives when we make decisions for financial expediency.

    (I hope no one sees this as being directed at any one position, just some thoughts I have for myself based on what I read)

  42. To Chris and Geoff,
    I appreciate your replies and will take to heart your thoughts/opinions. Perhaps I am too financially focused and this is a good test to help me realize that, regardless of how much money I am able to accumulate on earth, I will not be able to take a dime of it with me after I die.

    Most of our debt has been due to the skyrocketing costs of tuition at the institutions I have attended. I worked all through undergrad, and was able to stay our of any debt. However, in professional school and in the residency I am currently in, the tuition was between $30,000-$55,000 a year, and I was unable to work due to the course load and family demands (keeping my wife and two daughters happy :). I have worked weekends and nights to try to keep my debt-load to a minimum. You may find this hard to believe, but a few of my cohorts are $450,000-$500,000 in student loan debt, and to me, they are living within their means as well. I am in pretty good shape compared to them with regards to student loans.

    Personally, I would rather pay my loans off ASAP, and then give more than 10% when I have the ability (in my mind, I’d rather pay off that 7% interest and put some of that saved interest towards future tithing payments when I am not in financial bondage to the government). Deep down, I think if I focus on the Lord and the Spirit, He will provide enough for me to pay a full tithe, my student loans, and to have leftover at the end of the day. My wife and I have diligently payed tithing on the small amounts of income we have earned through the last 7 years of schooling, and we have ALWAYS had enough to do whatever we want, as long as it’s within reason.

    I will take this one to the Lord and know I can find peace in trusting him and obeying his principles.
    Thanks for your input.
    -Blake-

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