First the good news: the secular team just won a victory in court, declaring part of the “parsonage exemption” in the federal tax code unconstitutional.
Now the bad news: the case isn’t worth the paper it’s printed on or the electrons it agitates on-screen.
The parsonage exemption is found in Section 107 of the Internal Revenue Code. The first part of that section exempts from taxable income the rental value of a home furnished as compensation to a “minister of the gospel.” The second part exempts from taxable income the more common arrangement in which such a minister receives a “rental allowance” to cover his or her housing and utility costs, including mortgage payments.
A judge in the Western District of Wisconsin just declared the second part of Section 107 unconstitutional, largely because it has no secular purpose. She didn’t rule on the first part, but her logic would seem to apply to it as well. The lack of a secular purpose was vividly stated by the congressional sponsor of this law when it was enacted back in 1953: “Certainly, in these times when we are being threatened by a godless and anti-religious world movement we should correct this discrimination against certain ministers of the gospel who are carrying on such a courageous fight against this.” After forty-seven pages of dense analysis of First Amendment precedents, Judge Crabb concluded that this religious privilege is a slam-dunk violation of the Establishment Clause.
She is undoubtedly right. And her decision touched off the predictable howls of protest from the God industry, worried about the loss of an $800 million giveaway. Rabbi Jeffrey Salkin put the case bluntly: “Religion is good for society. Clergy members doing their sacred work is good for society.” Therefore, according to his logic, you and I should pay more in taxes so that clergy members can pay less—because they’re “good for society.”
You know who else is good for society? Plumbers. Most people get by just fine without clergy six days a week (or more). But when you need a plumber, you need a plumber. No amount of prayer is going to get that foot of water out of your basement. Therefore, I think we should have a tax-free allowance for plumbers. And nurses. And teachers. And software designers.
Other privilege defenders resort to simple lying, a time-tested God lobby technique. Pastor Chris Butler whines that “taking away the parsonage allowance is religious discrimination,” on the grounds that it “allows ministers to be treated on equal terms with many other secular employees who also receive housing allowances from their employers.” Judge Crabb’s opinion, though, goes to great pains to note that ministers are still completely eligible to receive tax-free housing allowances if they meet the restrictions that apply to the limited cases when secular employees can receive them. She also says that if Congress wants to permit tax-free housing allowances for everyone, that’s fine. The only thing it can’t do is single out ministers for special treatment, which is tantamount to establishing religion.
Unfortunately, just because a district court judge says the parsonage exemption is unconstitutional doesn’t mean it will disappear. In fact, it probably won’t be affected in the slightest, and the God industry will continue to enjoy its $800 million handout indefinitely. That’s because trying to use the courts to do the job Congress needs to do isn’t going to work.
Here’s how the case was brought. Several years ago, the same plaintiffs brought the same case and won before the same judge, only to have the decision reversed on appeal. The reason for the reversal was the legal doctrine of “standing.” Courts exist in order to resolve real disputes between parties who have a “dog in the fight,” not just to issue lofty pronouncements about what does and doesn’t strike their fancy as being unconstitutional. The first case was thrown out because the plaintiffs didn’t have “standing” to challenge the exemption because they had no direct financial involvement with it. Simply being a taxpayer who objects to a benefit some other taxpayer is getting isn’t enough, and never has been.
The plaintiffs next tried a different, cuter trick. They claimed the parsonage exemption on their own personal tax return, even though they explicitly admitted they were not ministers of any religion. At first, the IRS actually gave them the exemption, thwarting their litigation plans. But on a later return the IRS denied the claim. “It appears that your concerns are misdirected. Congress writes tax laws and it is the job of the Internal Revenue Service to implement them, they properly explained. “IRC Section 107 specifically requires that to exclude a housing allowance from income you must be a minister of the gospel. The IRS does not have the authority to interpret this to include anyone other than those who meet this definition.”
So the plaintiffs sued—but what was really at issue? The plaintiffs didn’t think they should get the exemption. The IRS didn’t think they should get the exemption. Where is the controversy? What business did the court have dealing with such a non-issue?
And now that they’ve won, what happens next? That’s unclear, because the judge left it open. It seems out of the question that they will get the exemption they applied for because the judge said it was unconstitutional. What happens next is, probably, nothing. The IRS can say,“We didn’t think they should get the exemption, and the judge agreed. Maybe by a different reasoning process than we used, but still the same result.”
What about other cases? Does the IRS have to start disallowing the exemption for the real ministers because of one judge in Wisconsin? No, it does not. The IRS has a wide array of options for responding to the thousands of cases that affect it every year, one of which they call “non-acquiescence.” If they think a judge in a particular district has made a decision that’s wrong, they will follow the judge’s order, but they won’t treat it as binding precedent anywhere else. My guess is they won’t even bother to appeal this case, but simply post it to their non-acquiescence list and not think about it again.
Congress created the parsonage exemption, and only Congress can get rid of it. The one way activists could help Congress along would be to pursue a more promising litigation strategy of having people demand the parsonage exemption who actually want to get it, unlike the plaintiffs in this case. Stretch it to the extreme, so that even Congress can see how absurd it is.
Lots of things get treated as religions nowadays, from white supremacy to body piercing to reverence for the “metaphor” of Satan. Tom Brady put together a thoughtful series on the “religion of sports,” and a Silicon Valley engineer is starting a religion of artificial intelligence. Humanism itself gets treated as a religion in some prison cases, so anything that’s good for humans is a religion, right?
Once you’ve pondered over a couple glasses of wine how to characterize your job as part of a religion, then arrange with your employer to take part of your compensation as a “housing allowance.” This isn’t hard—just have the employer write “housing allowance” on one of your regular paychecks. Pay your tax in full, so you don’t get in trouble. Then file an amended return, claiming that whatever work you do is a “religion,” and demand a refund relating to the housing allowance portion of your total compensation. Let the IRS decide whether what you do is really a religion or not. Let them try to justify why your religion is less deserving than the religion of white supremacy. If they have to deal with thousands of these claims, sorting out what is a religion from what isn’t, the pressure will increase on Congress to repeal this atrocity.