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The housing allowance is the most important tax benefit available to ministers–to the tune of 800 million dollars per year, and a federal district court recently ruled that it is unconstitutional. Here are some key facts you need to know about the housing allowance moving forward:
#1 What Happened Last Time
The Freedom from Religion Foundation challenged the housing allowance by classifying its atheist leaders as “ministers” and claiming a housing allowance for them. In 2013, a federal district court judge ruled the housing allowance violated the establishment clause of the First Amendment, but the 7th Circuit found that the Plaintiffs did not have sufficient injury to justify a case (they had not requested a refund) and dismissed the case. One interesting note: the Justice Department argued that these secular leaders should be classified as “ministers” and receive the allowance.
#2 What Happened This Time
The Freedom from Religion Foundation went back to court after “fixing” their standing/procedural problem. The same judge once again ruled that the housing allowance violates the establishment clause. She stated, “Although defendants try to characterize § 107(2) as an effort by Congress to treat ministers fairly and avoid religious entanglement, the plain language of the statute, its legislative history and its operation in practice all demonstrate a preference for ministers over secular employees.” This case will now head to the 7th Circuit. This time, the 7th Circuit will probably rule on the merits of the claim.
#3 What’s Next
The scrutiny of the Housing Allowance is not going away anytime soon, so we should carefully think through how to defend it moving forward. The Court’s ruling brings up two difficult/interesting questions:
Secular Ministers. Should a benefit that extends to Christians, Jews, Hindus, Muslims, etc. be extended to similarly situated (if that is applicable) leader of a secular organization?
Wealthy Ministers. Should a benefit that is intended for presumably poor/middle class ministers of the Gospel be applied to ministers that live in, well, mansions?
We carefully talk through these issues in the episode.
Finally, we discuss tax policy (we provide exemptions for many government policies, like buying homes, energy preservation and stable families) and the incredible social and financial impact of churches. Religious organizations are, by far, the most numerous and effective organizations handling society’s tough problems. To cut the housing allowance, which allows so many ministers to survive on low salaries and do such great work in their communities, would be terrible public policy.
If you have additional questions about this ruling, contact us at info@theboldchurch.com