7th Circuit throws out ‘parsonage exemption’ challenge on standing

FFRF Co-Presidents Dan Barker and Annie Laurie Gaylor said they will continue to seek a way to bring down the discriminatory “parsonage exemption” after an appeals court on Nov. 13 overturned a district court ruling, saying they had no standing to sue.

“You’ll hear from us again,” the plaintiff couple promised, after criticizing the 7th Circuit U.S. Court of Appeals, one of the country’s most conservative appellate courts, for “timidity” in refusing to confront “this blatant preference for ministers and churches.”

The panel, in a unanimous decision written by Judge Joel Flaum, vacated a favorable ruling a year ago by U.S. District Judge Barbara Crabb for the Western District of Wisconsin, declaring unconstitutional 26 U.S. C. § 107(2). The 1954 bill’s sponsor, Rep. Peter Mack, argued ministers should be rewarded for “carrying on such a courageous fight against this [godless and anti-religious world movement].”

The generous law allows “ministers of the gospel” to be paid through a housing allowance that can be excluded from taxable income. Ministers may use the untaxed income to purchase a home and, in a practice known as “double dipping,” deduct interest paid on the mortgage and property taxes.

“It’s important to note,” said attorney Richard L. Bolton, who handled the litigation, “that the court’s opinion in no way reflects that the housing allowance is constitutional.” As Flaum himself noted, the court did “not reach the issue of the constitutionality of the parsonage exemption.”

In fact, the court seemed to acknowledge that the law is discriminatory, saying “the mere fact that discrimination is occurring is not enough to establish standing.”
FFRF sets aside a portion of the co-presidents’ salaries as a “housing allowance,” which, under the IRS code, the couple is not eligible to claim, as they are not “ministers of the gospel,” but instead espouse atheism, freethought and secularism.

Gaylor and Barker took issue with the appeals court’s cavalier assessment that they have suffered no concrete injury, since they must pay taxes on their housing allowance, while ministers are rewarded, simply for being religious leaders, with a unique and substantial tax benefit.

“We’ll continue to challenge this indefensible favoritism for religion in other forums until the issue cannot be circumvented,” Barker promised. Barker is a former minister who was rewarded with this subsidy when he was “Rev. Barker” the believer, but is now penalized as “Mr. Barker” the freethought leader.

Virtually all major denominations and many minor congregations weighed in, with amicus briefs against FFRF’s challenge to religious privilege, including Protestant, Catholic, Jewish, Unitarian and Muslim. “The entitlement and privilege which religion and its leaders demand is discriminatory, and clearly signals governmental preference and subsidy for the promulgation of religion over nonreligion,” Gaylor charged.
Stay tuned!

Freedom From Religion Foundation