Since 1954, American clergy members have gotten a tax break thanks to Code Section 107(2), which allows that “ministers of the gospel” exclude housing allowances from their taxable income. The code isn’t limited to priests—imams, rabbis, and other religious leaders are exempt.
This might soon change thanks to a ruling by U.S. District Judge Barbara Crabb, who ruled that the code is unconstitutional.This isn’t the first time Crabb has handed down this decision. She ruled the same exemption unconstitutional in 2013, but the 7th U.S. Circuit Court of Appeals reversed her decision due to the fact that the plaintiffs—Freedom From Religion Foundation—had no standing. FFRF’s contention was that the tax code discriminates against the secular workforce, favoring religious workers, which is a violation of church and state.
And so FFRF requested the exemption in 2015. They were rejected, giving them standing. They then filed the lawsuit again, and again have been successful. In her ruling, Crabb writes,
Although defendants try to characterize § 107(2) as an effort by Congress to treat ministers fairly and avoid religious entanglement, the plain language of the statute, its legislative history and its operation in practice all demonstrate a preference for ministers over secular employees.
When the code was first passed in 1954, Democratic congressman Peter Mack from Illinois did not mince words as to why this exemption needed to pass, which, in reflection, does not help win the separation of church and state argument:
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.
This is no small tax exemption. It is estimated that the US government will lose $810 million in 2018 (expected to increase to a billion by 2023) in taxes. And it might even extend beyond that. One criticism is that clergy can “double dip”: they buy a home with untaxed income, then deduct the interest on mortgage and property taxes.
Joel Osteen, the pastor of Lakewood Church, stands with his wife, Victoria Osteen, as he conducts a service at his church as the city starts the process of rebuilding after severe flooding during Hurricane and Tropical Storm Harvey…
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