Diverse groups defend clergy tax break
Recent friend-of-the-court briefs dispute a judge’s ruling that the IRS ministerial housing allowance violates the separation of church and state.
By Bob Allen
Christians, Jews, Muslims and Hindus may have different ideas about God, but they all agree on a tax break for clergy under attack by an atheist group that says it discriminates against the non-religious.
Interests diverse as conservative evangelicals, mainline Protestants and one group broad enough to embrace both the Southern Baptist Convention and The International Society for Krishna Consciousness filed legal briefs in recent days asking an appeals court to reverse a lower-court decision last year ending a 60-year-old “parsonage allowance” that allows churches to provide ministers with tax-exempt housing allowances in lieu of housing them in parsonages on church property.
The Becket Fund for Religious Liberty filed a brief April 8 representing Muslim, Eastern Orthodox and Hindu religious groups — as well as the SBC’s Ethics and Religious Liberty Commission and International Mission Board.
The brief says the groups disagree “profoundly on matters of theology, but are united by their deep concerns” about the “direct, immediate and harmful financial effect” on faith groups that rely on the parsonage allowance to provide housing to their ministers.
The Church Alliance, a coalition of the chief executive officers of more than 30 denominational benefit programs, weighed in April 9 with a brief arguing that the tax break passes constitutional muster because it has a secular purpose and its primary effect is neither to advance nor inhibit religion.
“The United States Supreme Court has long distinguished between affirmative assistance to religious organizations and merely lifting government‐imposed burdens so as to allow those organizations to exercise their religious mission more freely,” claimed groups including the American Baptist Churches in the U.S.A., Board of Retirement and Insurance of the National Association of Free Will Baptists and Converge Worldwide, formerly the Baptist General Conference.
“When Congress chooses not to impose a burden on religious organizations — whether by means of tax exemption or regulatory exception — it honors, rather than transgresses, this nation’s long tradition of separation between church and state.”
Alliance Defending Freedom, founded in 1994 by conservative evangelicals including James Dobson, D. James Kennedy and Bill Bright, represents 624 pastors and churches from denominational backgrounds including Assemblies of God, Baptist, Catholic, Episcopal, Lutheran, Methodist, Nazarene, Presbyterian and independent, nondenominational churches in a brief filed April 9.
ADF lawyers claim the lower court’s decision “turns upon one critical assumption — that every tax exemption is a government subsidy,” and challenge the idea on numerous grounds.
All the briefs respond to a surprise ruling in November 2013 by a federal judge in Wisconsin that a section of the tax code granting a benefit for “ministers of the gospel” not available to everyone else favors religion over non-religion, thus creating an establishment of religion prohibited by the First Amendment of the U.S. Constitution.
The case is currently on appeal before the Seventh Circuit U.S. Court of Appeals in Chicago. It started in September 2011 with a lawsuit by the Freedom from Religion Foundation, a group based in Madison, Wis., advocating for “freethinkers” such as atheists, agnostics and skeptics since 1978.
The lawsuit claims the housing allowance shows favoritism by the government for religion over and against unbelief. The Obama administration says the group has no standing in the case because it doesn’t seek the benefit for itself but only wants to withhold it from others.
FFRF leaders claim the parsonage allowance, passed in 1954, is a holdover from Cold War-era politics denouncing “godless” Communism as a threat to the American way of life. The Beckett Fund brief on behalf of Muslim, Southern Baptist, Eastern Orthodox and Hindu religious groups, however, says the intent is to ensure equal treatment for ministers and non-ministers under a “convenience of the employer” doctrine first recognized by administrative rulings in 1914.
The doctrine applies to people like hotel managers who must live on premises, military officers who must live in the barracks or commercial fishermen who must live on a ship. In those cases the employer pays the cost of an employee’s housing, but the IRS does not consider it income.
“Since its inception, the federal income tax system has recognized that some housing costs are incurred primarily for ‘the convenience of the employer’ — not for the employee’s personal consumption — and are therefore not income,” the brief argues.
“The convenience of the employer doctrine flows from a very basic principle about the nature of income,” the brief continues. “Namely, for something to qualify as income, there must be an economic gain, and this gain must primarily benefit the taxpayer personally.”
The brief explains that any number of things might benefit both a worker and the employer, such as meals, travel, entertainment and office furnishings, but if they are primarily intended to further the business rather than compensate the employee, they are not treated as income.
Over the years Congress has carved out a number of specific exemptions for Americans living overseas, government workers and anyone required to be away from home or business for an extended time.
Becket Fund lawyers say ministers fit comfortably within the “convenience of the employer” doctrine. They are typically required to live at or near the church to be close to those they serve. They are expected to be available at all hours of the day and night.
Ministers are expected to use their homes for various church events like Bible studies, meetings, meals for new members and providing temporary lodging for guest speakers and missionaries. The comfort and privacy of a home sometimes is better than a formal office for things like crisis counseling with church members or sensitive staff meetings.
Many congregants also expect the minister’s home to be accessible for unplanned social visits. Sermons are often prepared in the home. In many small churches, the minister is the primary caretaker of the church building.
“The majority of Southern Baptist congregations are small, with very limited financial resources,” the SBC Ethics and Religious Liberty Commission argues in a portion of the brief. “As a result, most are unable to afford a parsonage and rely heavily on the parsonage allowance to ensure that ministers have the housing needed for their job.”
The International Mission Board says it relies on the ability to assign housing locations to its missionaries in a way that furthers its Christian ministry, “or, in secular terms, in a way that is for the convenience of IMB.”
“The starting base salary of a missionary is a little over $20,000 and the average base salary of an IMB missionary family is about $40,000,” the IMB argues. With approximately 5,000 commissioned missionaries serving in 150 countries around the world, it continues, “loss of the clergy housing allowance would have a devastating financial impact” on the IMB.
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