The Freedom From Religion Foundation and plaintiffs Annie Laurie Gaylor and Dan Barker won a significant ruling Nov. 22 in federal court declaring unconstitutional the 1954 “parish exemption” benefiting “ministers of the gospel.”
The challenge, filed in September 2011, has far-reaching ramifications for up to 83% of ministers who receive a housing allowance. (Read a story on the clergy outcry against this decision on page 17.)
“May we say ‘Hallelujah?’ ” said Gaylor. She and Barker are FFRF co-presidents. “The judge 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.”
The government has 60 days to appeal. While enjoining Treasury Secretary Jacob Lew and IRS Acting Commissioner Daniel Werfel from enforcing the tax break, U.S. District Judge Barbara Crabb for the Western District of Wisconsin stayed her ruling until the conclusion of any appeal, as is typical in significant cases.
The law allows “ministers of the gospel” paid through a housing allowance to exclude that allowance from taxable income. It is not a tax “deduction” but is a tax exclusion. Ministers may, for instance, use this untaxed income to purchase a home, and, in a practice known as “double dipping,” may then deduct interest paid on the mortgage and property taxes.
Crabb issued a 43-page decision declaring 26 U.S.C. §107(2) unconstitutional. Quoting the Supreme Court, Crabb noted, “Every tax exemption constitutes subsidy.”
Crabb wrote, “Some might view a rule against preferential treatment as exhibiting hostility toward religion, but equality should never be mistaken for hostility. It is important to remember that the Establishment Clause protects the religious and nonreligious alike.”
“The court’s decision does not evince hostility to religion, nor should it even seem controversial,” said Richard L. Bolton, FFRF’s attorney in the case. “The court has simply recognized the reality that a tax-free housing allowance available only to ministers is a significant benefit from the government and is unconstitutionally provided on the basis of religion.”
The benefit to clergy is enormous, saving an estimated $2.3 billion in taxes in the years 2002-07 alone, according to a 2002 statement by U.S. Rep Jim Ramstad, R-Minn., cited in Crabb’s ruling. Clergy may use the housing allowance for rent or mortgages and home improvements, including furnishings, property taxes and maintenance.
In 2002, a case went before the 9th Circuit U.S. Court of Appeals when the IRS sued Rev. Rick Warren of Saddleback Church. Warren had claimed all or nearly all of his California housing costs for several years as a tax-free parsonage allowance.
The 9th Circuit was poised to rule against Warren, so Congress immediately passed the Clergy Housing Allowance Clarification Act of 2002 to moot the case. From 2002 on, the law restricted the parsonage exemption to “reasonable rental value.”
The 1954 bill’s sponsor, Rep. Peter Mack, D-Ill., argued that ministers should be rewarded for “carrying on such a courageous fight against this [godless and anti-religious world movement].”
Judge: No secular purpose
“I agree with plaintiffs that §107(2) does not have a secular purpose or effect,” wrote Crabb, adding that a reasonable observer would view it “as an endorsement of religion.” Crabb wrote that “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.”
All taxpayers are burdened by taxes, Crabb noted. “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 rejected the claim that the 1954 law was necessary to eliminate “discrimination” against ministers not living in parsonages. “A desire to assist disadvantaged churches and ministers is not a secular purpose and it does not produce a secular effect when similarly disadvantaged secular organizations and employees are excluded from the benefit.”
She added, “Under defendants’ view, there would be no limit to the amount of support the government could provide to religious groups over secular ones.”
Crabb invoked the Supreme Court’s 1989 case, Texas Monthly Inc. v. Bullock, calling exemptions for religious publishers from having to collect state sales taxes “unjustifiable awards of assistance to religious organizations.”
“If a statute imposed a tax solely against ministers (or granted an exemption to everyone except ministers) without a secular reason for doing so, that law would violate the Constitution just as §107(2) does,” Crabb reasoned.
Other cases pending
Crabb dismissed as implausible the government’s bizarre argument that atheists Gaylor and Barker could “conceivably” qualify as “ministers of the gospel.” The government put forth that argument seeking to deny them standing and thus get the challenge dismissed.
Gaylor and Barker, as directors of an educational organization advocating atheism and freethought, earned standing because they have not been entitled to claim the housing allowance FFRF designates for them, while any “minister of the gospel” may do so for promoting religion.
Crabb’s decision noted that Treasury Secretary Donald Regan wrote a 1984 memorandum advising repeal of §107 because there “is no evidence that the financial circumstances of ministers justify special tax treatment.” Ministerial compensation may be low compared to other professions, but “not compared to taxpayers in general.” The recommendation was withdrawn after clergy protests.
In 1921, Congress passed a law allowing ministers to exclude from gross income the rental value of housing, such as a parsonage, received as part of compensation, saying it was for the convenience of the employer. Since FFRF does not provide Gaylor and Barker with a house, FFRF voluntarily dropped that portion of its challenge.
The far-ranging ruling makes interesting reading, even working in Robert Ingersoll’s maxim, “With soap, baptism is a good thing” (included on FFRF’s “Debaptism Certificate”).
FFRF has three federal lawsuits against the IRS for preferential treatment of religion versus irreligion. FFRF and its plaintiffs have been found to have preliminary standing in a challenge to the IRS for failure to enforce church electioneering restrictions.
FFRF has also been found to have standing to pursue its challenge of an IRS provision which exempts church denominations from an annual reporting requirement that applies to all other 501(c)(3) tax-exempt organizations, essentially shielding them from public accountability.
Read the ruling:
This nontract is available at the FFRF shop
Critics of the Christian bible occasionally can score a point or two in discussion with the religious community by noting the many teachings in both the Old and New Testaments that encourage the bible believer to hate and to kill, biblical lessons that history proves Christians have taken most seriously. Nonetheless the bible defendant is apt to offer as an indisputable parting shot, “But don’t forget the ten commandments. They are the basic bible teaching. Study the ten commandments.”
This nontract is available for sale from FFRF's shop
The U.S. Constitution is a secular document. It begins, “We the people,” and contains no mention of “God” or “Christianity.” Its only references to religion are exclusionary, such as, “no religious test shall ever be required as a qualiﬁcation to any ofﬁce or public trust” (Art. VI), and “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof” (First Amendment). The presidential oath of ofﬁce, the only oath detailed in the Constitution, does not contain the phrase “so help me God” or any requirement to swear on a bible (Art. II, Sec. 7). If we are a Christian nation, why doesn't our Constitution say so? In 1797 America made a treaty with Tripoli, declaring that “the government of the United States is not, in any sense, founded on the Christian religion.” This reassurance to Islam was written under Washington’s presidency, and approved by the Senate under John Adams.
For an overwhelming part of U.S. history, America's motto was purely secular, "E Pluribus Unum" (From many [come] one). E Pluribus Unum was chosen by a committee of Jefferson, Adams and Franklin. Many Americans mistakenly assume our founders chose "In God We Trust" as the motto, but nothing could be further from the truth. Our founders were committed to a secular government. For most of U.S. history, our money was likewise free of religion.
The Police Department in Searcy, Ark., appears to be doubling down on its efforts to inject religion into government with the addition of another Christian cross on its lawn.
The Freedom From Religion Foundation first notified then-Police Chief Kyle Osborne about the violation in March 2013 after a local citizen complained to FFRF. Since then, city officials have stonewalled the Madison, Wis.-based group that advocates nationwide for state-church separation.
On January 29 FFRF senior staff attorney Rebecca Markert, sent another letter to City Attorney Buck Gibson, following up one sent Jan. 16. "It has come to FFRF's attention that a second cross has been erected on the lawn of the city of Searcy Police Department." A photo (above) shows the crosses side by side.
As noted in FFRF's Jan. 16 press release, current Police Chief Jeremy Clark first claimed last May that he'd found "no such display." In December, he admitted there was a cross but claimed it was a moot issue because it was near his “private entrance.”
"We write again to request that you move the additional cross as well and any other crosses that appear on the lawn of the Police Department," Markert said in her Feb. 3 letter.
FFRF also sent letters Jan. 16 to Clark and Mayor David Morris about public comments attributed to them that were reported in the Daily Citizen newspaper.
Morris called Searcy (a city of about 23,000) a “Christian community,” and Clark reportedly said, “Christianity is part of our police department.”
FFRF Co-Presidents Dan Barker and Annie Laurie Gaylor took issue with both of those statements. "As mayor, you represent all Searcy residents, including atheists, Jews, and other non-Christians. In other words, you were elected to represent the entire city, not just Christians."
News reports said St. Paul United Methodist Church placed the first cross on city property in 2011.
The latest letter asks for a written response from the city so the local complainant can be assured the law is being complied with.
38TH ANNUAL NATIONAL CONVENTION - 2015
WEEKEND OF OCTOBER 9-10, 2015
Monona Terrace Community and Convention Center
1 John Nolen Drive
Madison, WI 53703
The federal government filed notice Jan. 24 that it's appealing the Freedom From Religion Foundation's significant federal court victory declaring the "parish exemption" unconstitutional. Under the 1954 law, "ministers of the gospel" don't pay any taxes on salary designated as a "housing allowance."
U.S. District Judge Barbara B. Crabb for the Western District of Wisconsin issued a strong, 43-page decision on Nov. 22 declaring 26 U.S. C. § 107(2) unconstitutional. The case is FFRF, Annie Laurie Gaylor and Dan Barker v. Jacob Lew, Acting Secretary of the Treasury Department and Daniel Werfel, Acting Commissioner of the International Revenue Service.
The appeal will go before the 7th Circuit U.S. Court of Appeals in Chicago.
The law allows "ministers of the gospel" who are paid through a housing allowance to exclude that allowance from taxable income. Ministers may even use untaxed income to buy a home and deduct interest paid on the mortgage and property taxes — known as "double dipping."
The clergy benefit costs the government up to $700 million a year in lost revenue, and benefits not just ministers but their employer churches, which can pay ministers less because untaxed income goes further.
Christianity Today found that 84 percent of senior pastors receive a housing allowance ranging from $20,000 to $38,000 in added (but not reported or taxed) salary.
"I agree with plaintiffs that §107(2) does not have a secular purpose or effect," wrote Crabb, adding that a reasonable observer would view it "as an endorsement of religion."
At the time of the federal ruling, attorney Richard L. Bolton, representing FFRF, noted: "The Court's decision does not evince hostility to religion — nor should it even seem controversial." However, the decision set off "shock waves" in the clergy network.
Clergy are permitted to use the housing allowance not just for rent or mortgages, but for a wide range of home improvements, including maintenance and repairs. They may exempt from taxable income up to the fair market rental value of their home, particularly benefiting well-heeled pastors.
The 1954 bill's sponsor, Rep. Peter Mack, argued ministers should be rewarded for "carrying on such a courageous fight" against a "godless and anti-religious world movement."
All taxpayers are burdened by taxes, Crabb noted. "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 other who must pay taxes on income used for housing expenses."
Gaylor and Barker, as co-presidents of FFRF, are the primary plaintiffs. Crabb agreed they have standing to sue and are injured because FFRF designates part of their salaries as a "housing allowance," but they are not lawfully able to claim the same benefit "ministers of the gospel" are accorded.
"The clergy and churches have become accustomed to privileges and prerogatives from our secular government which are not only unconstitutional, but which don't play fair. The rest of us should not have to pay more taxes, because clergy don't pay their fair share," said Gaylor.
Barker, a former minister, now heads the volunteer Clergy Project, which helps clergy who have changed their minds about religion leave the pulpit. Barker said he knows hundreds of former ministers who agree with FFRF that "the housing exclusion is an unfair and unwarranted boost from the government and should be abolished."