Written by Don Byrd

An appeals panel heard oral arguments last week in a challenge to the tax exemption for clergy housing (the “parsonage allowance”).The parsonage allowance permits clergy to exempt the portion of their income spent on housing and related expenses from income taxes.

This is the second time in the last five years that the 7th Circuit has had such a case before them. In 2014, the court overturned a district court’s ruling that the exemption is unconstitutional, finding that the plaintiffs did not have the standing to bring the case. This time, the appeals court seems poised to rule on the church-state issue after the same district court judge again struck down the provision.

Courthouse News Service reports on the arguments:

[Plaintiff Freedom From Religion Foundation] attorney Richard Bolton told the panel that “what we have here is an unjustified preference for religion.”

The clergy interveners – Pastor Chris Butler and Bishop Edward Peecher of Chicago Embassy Church, Father Patrick Malone of Holy Cross Anglican Church, the Diocese of Chicago and Mid-America of the Russian Orthodox Church Outside of Russia – claim [district court] Judge Crabb’s ruling threatens churches with almost $1 billion in new taxes each year.

“Today I asked the court to protect our ability to serve our South Side Chicago community – our youth, our single mothers, our homeless, our addicted, our lost, and all those who seek a church family,” Pastor Butler said in a statement. “I hope the court will keep letting religious leaders like me not only preach from the pulpit, but live among the people we serve.”

Via Religion Clause, you can listen to audio of the oral arguments here