Federal judge strikes down housing allowance for clergy

Crux | 10/9/2017 | Staff
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MADISON, Wisconsin - A federal judge in Wisconsin has struck down as unconstitutional a law that gives clergy tax-free housing allowances, in a ruling that could have far-reaching ramifications for religious leaders, who could be facing new taxes which will threaten their ministry.

Under the federal law passed in 1954, a “minister of the gospel” doesn’t pay income taxes on compensation that is designated part of a housing allowance. The Freedom From Religion Foundation, based in Madison, argued that the law discriminates against secular employees.

Benefit - Clergy - Leaders - Year - Taxes

The benefit saves clergy, including non-Christian religious leaders, $800 million a year in taxes, according to the latest estimate from the congressional Joint Committee on Taxation.

Under the law, housing allowances paid as part of clergy salary can be subtracted from their taxable income.

Tax - Provision - Leaders - South - Side

“This tax provision ensures that faith leaders like South Side, Chicago-based pastor Chris Butler receive the same tax treatment as other employees who must live in the communities they serve-like military service members, teachers, and overseas workers,” Becket - a non-profit religious liberty law firm - said in a press released.

Butler’s Chicago Embassy Church ministers in one of the poorest areas of the city, and Becket said losing the allowance could force Butler to move out of his neighborhood or take up a second job. The firm said it would also force other churches to close altogether.

Freedom - From - Religion - Foundation - Member

The Freedom From Religion Foundation argued that a clergy member can use the untaxed income to purchase a home, and then, in a practice known as “double dipping,” deduct interest paid on the mortgage and property taxes.

U.S. District Judge Barbara Crabb ruled Friday that the exemption provides an unconstitutional benefit to religious persons and no one else, violating the establishment clause of the U.S. Constitution.

Conclusion - Minister

“In reaching this conclusion, I do not mean to imply that any particular minister is...
(Excerpt) Read more at: Crux
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