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Clergy Tax Break Unconstitutional, Inevitable Appeals to Come

By Gabriella Khorasanee, JD | Last updated on

Did you know that the clergy get tax breaks? Neither did we. Apparently there's a section in the federal tax code that allows "a minister of the gospel" to not include rental allowances in gross income calculations for tax purposes.

Parsonage Exemption

The housing allowance, known as "parsonage," came under fire by the Freedom From Religion Foundation, Inc. ("FFRF"), an organization dedicated to the separation of church and state. Last week, a District Judge Barbara Crabb found § 107(2) of the Internal Revenue Code unconstitutional, reports Forbes.

Defendants, government officials, argued that the law was enacted to eliminate religious discrimination, while a statement by the law's sponsor, Representative Peter Mack, damningly showed otherwise, that is, that the law was intended to send a message supporting religion in the wake of the Cold War.

Establishment of Religion

District Judge Crabb applied the Lemon test, and found that § 107(2) did not pass muster. In support of her decision, Judge Crabb relied on Texas Monthly, Inc. v. Bullock, the only Supreme Court decision to weigh in on a tax exemption only available to religious people. In Texas Monthly, the Court found the tax exemption violated the Lemon test, and O'Connor's endorsement test, finding that "[e]very tax exemption constitutes a subsidy."

Finding Texas Monthly controlling, Judge Crabb held that § 107(2) violated the establishment clause, as there was no secular purpose for the law, and it benefitted only religious persons. She also noted, quoting Texas Monthly, that § 107(2) produces "greater state entanglement with religion than the denial of an exemption."


Perhaps forecasting the inevitable appeals that will follow, Judge Crabb noted that the injunction against enforcing § 107(2) is stayed pending appeals. While GuideStone Financial Resources and the Ethics & Religious Liberty Commission are already "vowing to fight back and appeal the decision," reports The Blaze, FFRF founders have stated, "[H]allelujah! 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."

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