There's a fight brewing over whether housing for Clergy should be tax-free. I must admit that where once I might have strongly advocated for this exemption, despite the lack of consistency over the separation of church and state, I look around me and see where religion, not universally but frequently enough, no longer is the advocate of "doing no harm" and serving only the moral and spiritual needs of its members. That faith bodies are now advocating for the Johnson Amendment to be removed (a clear failing to respect the separation of church and state) and that churches are already in possession of huge tax-free land-holdings and that churches (some) are even advocating doing harm (for instance the anti-gay folks), AND, that many faith practices aren't governed by anyone but those who benefit directly from that body (if even this), leads me to believe that faith practices are little more than exclusive clubs free of responsibility to community. And yes, there are the exceptions who are the pillars of their communities but do we make rules to accommodate the exceptions? One would hope not and certainly, this particular challenge over one element of this exemption is not enough to can the whole thing but one does wonder...
Here's the Wall Street Journal story on this matter.
Religious Groups, Atheists Clash Over Tax-Free Housing for Clergy
Lawsuit targets decades-old parsonage allowance as promoting religion
CHICAGO—A lawyer for religious groups on Wednesday defended in federal court a 64-year-old tax break that grants priests, rabbis and imams tax-free housing allowances—costing the Treasury of hundreds of millions of dollars a year.
A district judge in Wisconsin last year sided with a group that backs the separation of church and state, ruling that the law discriminates against other taxpayers and violates the Constitution “because a reasonable observer would view the statute as an endorsement of religion.”
On Wednesday, the two sides argued the case before the Seventh Circuit Court of Appeals in Chicago.
At stake is section 107(2) of the Internal Revenue Code, passed by Congress in 1954, allowing a “minister of the gospel” to exclude from his gross income the “rental allowance paid to him as part of his compensation.” The law has been interpreted to include rabbis, imams and other religious figures.
The tax break, commonly called the parsonage exemption, reduces federal revenue by $700 million a year, according to estimates from Congress’s Joint Committee on Taxation.
Luke Goodrich, the lead lawyer representing clergy, pointed out that some secular employees—including military personnel—receive tax-free housing. Under section 119 of the federal tax law, any employee can exclude housing from his or her gross income if lodging on the premises is required as a condition of employment and provided for the convenience of the employer.
Pastors are typically required to live in their communities to better serve them, supporters of the tax break say.
Mr. Goodrich, an attorney for the Becket Fund for Religious Liberty, a nonprofit legal institute, argued in court on Wednesday that “history strongly supports the constitutionality” of the break. “This is not special treatment for ministers,” Mr. Goodrich said. “Rather, it’s taking a broad rule that applies to hundreds of thousands of nonreligious workers, and it’s applying to ministers.”
Annie Laurie Gaylor, co-founder of the Freedom From Religion Foundation, a nonprofit advocating for the separation of church and state, lambasted the parsonage allowance as a “baldfaced promotion of religion.”
“Rewarding ministers for fighting godlessness with a subsidy is promotion of religion by the government,” Ms. Gaylor said.
The Freedom From Religion Foundation is an educational nonprofit and association of atheists, agnostics and skeptics. When calling its headquarters in Madison, Wis., cheery hold music to the tune of “Battle of Jericho” includes the lyrics: “I’ve heard about your hero Joshua/but his accomplishments are not so great/because there’s none like Thomas Jefferson and the wall between church and state.”
Some tax-law experts have also said the tax break for clergy is unconstitutional. Prof. Adam Chodorow of Arizona State University said the tax exclusion has received little pushback because of how costly it is to litigate a public-interest lawsuit.
Prof. Chodorow, who argued in court on Wednesday, said the benefit has been stretched to faculty at religiously affiliated schools.
“I don’t think that the parsonage exemption is bankrupting America, but it’s money we could be using for other important purposes,” he said.
A spokesman for the IRS declined to comment, citing pending litigation.
Father Patrick Malone, who advocates for the tax break, said he didn’t go into the ministry to get rich.
“When people give money to the church, it’s their understanding they’re giving their money to God,” he said in a phone interview. “They’re not thinking it’s going to tax because they’re not purchasing a product.”