By Lauren Markoe, Religion News Service with BJC Staff Reports
A federal court of appeals rejected a case brought by an atheist organization that would have declared tax-exempt clergy housing allowances — often a large chunk of a pastor’s compensation — unconstitutional.
The Nov. 13 ruling overturns a 2013 decision by U.S. District Court Judge Barbara Crabb, who had ruled that the exemption “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.”
But the Freedom from Religion Foundation, a Madison, Wisconsin-based group that has pursued the case since 2011, vowed to fight on.
“We are disappointed but we are not giving up,” said Annie Laurie Gaylor, FFRF’s co-president. “We are so clearly right and the law is so clearly unconstitutional.”
The Chicago-based 7th U.S. Circuit Court of Appeals overturned Crabb’s ruling in favor of the atheists because it found Gaylor and FFRF lacked “standing” — meaning they had no right to sue because the law did not affect them.
Gaylor and Dan Barker, her co-president and an ordained minister, did not seek a housing allowance for themselves under the law.
“Dan took the allowance when he was a minister, but now that he is head of the largest atheist and agnostic organization in the country, he cannot take it,” Gaylor said. “That clearly shows preference for religion.”
Churches routinely designate a portion of a pastor’s salary as a housing allowance. So, for example, a minister who earns an average of $50,000 may receive another third of income, or $16,000, as a tax-free housing allowance, essentially earning $66,000. Having to pay taxes on the additional $16,000 ($4,000 in this case), would mean a 6 percent cut in salary.
The exemption is worth about $700 million per year, according to the Joint Committee on Taxation’s Estimate of Federal Tax Expenditure.
Supporters of the tax break say it helps alleviate government costs for social services by routing that assistance through houses of worship.
BJC Executive Director Brent Walker has said the allowance “does not violate the First Amendment’s Establishment Clause.” When Crabb first struck down the ordinance, he noted that the Free Exercise Clause does not require such accommodation, but the Establishment Clause does not forbid it. Other segments of society — such as members of the military and taxpayers living abroad — also receive similar relief in other sections of the tax code.
Gaylor said FFRF was reconsidering its legal options and would not drop the case. The only venue left to hear the case would be the U.S. Supreme Court.
“We are regrouping,” she said.
From the November/December 2014 Report From the Capital. Click here to read the next article.