Members of the nation's clergy were dealt a fiscal blow after a federal judge shot down as unconstitutional their religious-housing exemption, which has traditionally given tax breaks to ministers who could now lose up to 10 percent of their compensation.
The ruling late last month from U.S. District Court Judge Barbara Crabb, came in support of a lawsuit brought by the Freedom From Religion Foundation (FFRF) of Madison, Wis., and has sparked anger from religious and family groups.
The federal lawsuit asserted that a housing allowance for clergy violated the Constitution's equal protection clause and separation of church and state mandate.
Such an exemption for clergy "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," Crabb wrote in the decision, which will likely be reversed upon appeal according to several legal experts.
The Family Research Council has created an
online petition calling for the opinion to be overturned and FRC President Tony Perkins called the ruling "one of the most shocking attacks on churches in recent memory."
"In typical liberal fashion, FFRF suggests that churches are somehow stealing from the government if they aren't taxed for something. In other words, everything belongs to the government and Washington is simply letting us use what's theirs," Perkins said, writing on his association's website.
Perkins said that "if the U.S. Court of Appeals in Chicago doesn't reverse her opinion, expect pastors, rabbis, imams, and others to rise up in revolt."
Crabb, in her 43-page ruling from the federal court's Western District of Wisconsin, said ministers of the gospel are not entitled to "the rental allowance paid to him as part of his compensation," adding that "every tax exemption constitutes subsidy."
"Some might view a rule against preferential treatment as exhibiting hostility toward religion, but equality should never be mistaken for hostility," Crabb said in the decision. "It is important to remember that the establishment clause protects the religious and nonreligious alike."
About 44,000 U.S. clergy are expected to be impacted if the ruling is not overturned.
The exemption nationwide amounts to about $700 million per year,
according to Religion News Service, which cited the Joint Committee on Taxation's Estimate of Federal Tax Expenditure.
John Whitehead, an attorney who serves as president of the Rutherford Institute, told Newsmax that precedent already exists for overturning Crabb's decision, citing case law and noting that pastors are not the only groups singled out for housing exemptions.
If the judge's ruling is upheld by the Court of Appeals, "it would force the Supreme Court to hear the case and they are going to have to overturn strong precedents and tradition over the years" to concur, Whitehead said.
Ken Klukowski, who directs the FRC's Center for Religious Liberty, said "the U.S Supreme Court has made crystal clear that these sorts of laws do not injure anyone. We expect the U.S. Court of Appeals in Chicago to promptly reverse this decision. This is a decision that flies in the face of controlling precedent."
The ruling, if left intact, would be a financial blow to religious institutions which compensate clergy with housing benefits.
"This ruling is a huge deal because it would have a dramatic impact in how the church compensates its ministers," said Tom Wetmore, associate general counsel for the Seventh-day Adventist Church
in an interview with the Adventist News Network.
"We have long depended on this tax benefit for the compensation package for our clergy in North America," Wetmore said, noting that the Adventists would likely file an amicus brief if the case is appealed. "The after-tax benefit to Adventist ministers is estimated between 5 and 10 percent of their total compensation package."
Wetmore noted that the ruling could impact other unique tax issues for ministers and churches, including current exemptions allowed for revenue reporting activities and benefit plans provided by the church.
Perkins called the judge's rationale "an amazing level of arrogance."
"Judge Crabb neglected to consult the Constitution she was sworn to uphold. Going back to Patrick Henry in 1785, society has tried to relieve the clergy's housing burden because of the tremendous social benefits churches offer the culture," Perkins said.
Perkins said that the charitable work done by churches lessens the burden for social programs paid for by the taxpayer.
"Through charitable work for the homeless, substance abuse, marriage counseling, adoption, and other initiatives, the church's outreach helps treat a lot of the social ills that would otherwise become the burden of taxpayers and the federal government," Perkins said.
FFRF officials, however, said the decision was the correct interpretation of the Constitution.
"The rest of us should not pay more because clergy pay less," FFRF Co-presidents Laurie Gaylor and Dan Barker in a statement.
Added Richard L. Bolton, the attorney who represented the FFRF in the case: "The court's decision does not evince hostility to religion — nor should it even seem controversial. The court has simply recognized the reality that a tax-free housing allowance available only to ministers is a significant benefit from the government unconstitutionally provided on the basis of religion."
The clergy housing exemption grew out of the Administrative Procedure Act of 1954. Many pastors who receive church housing, or funds for it, count on the parsonage allowance as a part of their salary package.
Clergy would not be impacted by the ruling until all appeals are exhausted, the judge said, noting she would not seek to immediately enforce it.
Joe Carter, of the Ethics & Religious Liberty Commission (ERLC) of the Southern Baptist Convention, writing in the Baptist Press, noted that members of the nation's clergy aren't the only beneficiaries of such an exemption on housing. Members of the Foreign Service, Peace Corps, and military have tax-free housing allowances as provided by Congress.
The ERLC, joined by GuideStone Financial Resources, said in a joint statement that they planned to fight against the judgment.
"The clergy housing allowance isn't a government establishment of religion, but just the reverse," said ERLC President Russell D. Moore. "The allowance is neutral to all religions. Without it, clergy in small congregations of all sorts would be penalized and harmed.
"We will continue to fight to protect the housing allowance, because we believe clergy are essential for flourishing, vibrant communities," Moore said.
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