Major FFRF Legal Victory Eliminates Tax-Free Housing for Pastors November 23, 2013

Major FFRF Legal Victory Eliminates Tax-Free Housing for Pastors

For years now, the Freedom From Religion Foundation has been in a legal battle to end the “parish exemption” that allows ministers to deduct the cost of rent for their church-owned houses from their taxable income. FFRF believes that this shows preferential treatment for religious leaders.

FFRF’s own board has even paid its co-presidents Dan Barker and Annie Laurie Gaylor $15,000 each as part of their housing allowance, but because they don’t qualify as “ministers of the gospel,” the law doesn’t apply to them. That’s one of the ways they’ve tried to prove the law is illegal.

A few months ago, the U.S. Department of Justice ridiculously argued that the exemption was legal and that FFRF’s leaders were eligible for the tax breaks… because atheism, they said, was a religion:

Non-theistic beliefs, including atheism, may qualify as “religious” beliefs in various contexts because they pertain to religion and fulfill a similar role in a person’s life:

Because [FFRF] can show no facts to suggest that the IRS will apply terms like “minister” and “religious organization” as if they turn on adherence to some theistic belief or other content, this Court should not presume that the IRS would act inconsistently with the governing law regarding whether atheism a religion for purposes of an atheist’s claim…

No thanks, says Gaylor.

“We are not ministers,” she said. “We are having to tell the government the obvious — we are not a church.”

Yesterday, in a very surprising (but legally sound) decision, U.S. District Judge Barbara B. Crabb ruled in favor of the FFRF, writing that the “parish exemption” was indeed unconstitutional:

Thanks to FFRF, he’s going to have to give some of that money back…

the exemption provides a benefit to religious persons and no one else, even though doing so is not necessary to alleviate a special burden on religious exercise.

Some might view a rule against preferential treatment as exhibiting hostility toward religion, but equality should never be mistaken for hostility.

Although it is undoubtedly true that taxes impose a burden on ministers, the same is true for all taxpayers. Defendants do not identify any reason why a requirement on ministers to pay taxes on a housing allowance is more burdensome for them than for the many millions of others who must pay taxes on income used for housing expenses.

Crabb even laughed off the idea that Barker and Gaylor should be considered “ministers”:

Although defendants devote a substantial amount of their briefs to this argument, it is difficult to take it seriously. Under no remotely plausible interpretation of § 107 could plaintiffs Gaylor and Barker qualify as “ministers of the gospel.

Defendants cite no persuasive evidence that either Gaylor or Barker is ordained, that they perform “sacerdotal” functions or conduct “worship” services, that anyone in the foundation considers Gaylor and Barker to be “spiritual” leaders or that the foundation is under the authority of a “church.”

Which is just the judge’s polite way of saying:

A bit of history: This whole battle is over Internal Revenue Code section 107, which states:

In the case of a minister of the gospel, gross income does not include —

(1) the rental value of a home furnished to him as part of his compensation; or

(2) the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities.

That section was written by Congressman Peter Mack (D-IL) in 1953. As was the case with several pieces of legislation from that era, Mack introduced it to stand against those “godless Communists”:

Certainly, in these times when we are being threatened by a godless and anti-religious world movement we should correct this discrimination against certain ministers of the gospel who are carrying on such a courageous fight against this. Certainly this is not too much to do for these people who are caring for our spiritual welfare.

It has always been about advancing religion and keep down atheism.

And now, Judge Crabb has righted the wrong.

As you can imagine, FFRF was thrilled by the decision:

“May we say hallelujah! This decision agrees with us that Congress may not reward ministers for fighting a ‘godless and anti-religious’ movement by letting them pay less income tax. The rest of us should not pay more because clergy pay less,” Gaylor and Barker commented.

With the decision, Treasury Secretary Jacob Lew and IRS Acting Commissioner Daniel Werfel are not allowed to enforce the parsonage exemption — however, at Crabb’s request, as is typical in cases like this, the ruling won’t go into effect until the end of any possible appeals, which will undoubtedly be coming. (Pastor Rick Warren, in fact, has been a longtime defender of the parsonage exemption, as you might expect.)

This was absolutely the right decision. That it comes nearly 60 years after the law first went into effect is perhaps an optimistic sign that tradition alone isn’t a good reason to continue bad policy.

Pastors will argue that they deserve the exemption — they provide an important service for others and their salaries are (usually) very modest. But then again, teachers could say the same thing, and it’s not like they’re getting a tax break as nice as this.

I sometimes hear complaints from atheists that groups like FFRF are too litigious, that they fight battles that we’d be better off ignoring. But FFRF takes on these cases purely on principle. They know what the First Amendment says, even if lawmakers choose to ignore it, and they’ll go after violations of it big and small.

Make no mistake: This is a *huge* victory for proponents of church/state separation. It’ll be fought vigorously by the Religious Right who are probably in shock that a law they’ve relied on for decades may now be overturned. For now, though, FFRF deserves a lot of respect for their incredible victory.

On a related note, this isn’t the first time Judge Crabb has ruled in favor of church/state separationists.

In 2010, Crabb declared the National Day of Prayer unconstitutional:

“It goes beyond mere ‘acknowledgment’ of religion because its sole purpose is to encourage all citizens to engage in prayer, an inherently religious exercise that serves no secular function in this context. In this instance, the government has taken sides on a matter that must be left to individual conscience. When the government associates one set of religious beliefs with the state and identifies nonadherents as outsiders, it encroaches upon the individual’s decision about whether and how to worship.

(Image via Shutterstock)

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