Religious Income Tax Exemption Ruled Unconstitutional

This seems rightly done.

In a victory for secular Americans, a federal court has ruled a religious income tax exemption that allows “a minister of the gospel” to not pay income tax on a portion of their compensation to be unconstitutional.

U.S. District Court Judge Barbara B. Crabb of the Western District of Wisconsin ruled that the so-called “parish exemption,” which allows religious ministers to avoid paying taxes on the value of their housing granted to them by their religious employers, “violates the establishment clause” of the U.S. Constitution and must be discontinued.

The law, 26 U.S. C. § 107(2), has been on the books since 1954.

The tax exemption was estimated to cost U.S. taxpayers $2.3 billion from 2002-2007 alone, likely more in the years since.

One study has estimated that in total, combined religious tax exemptions cost American taxpayers $71 billion each year.

The Freedom From Religion Foundation (FFRF), which brought the lawsuit along with their co-presidents, Annie Laurie Gaylor and Dan Barker, consider the ruling a significant victory with far-reaching ramifications. Gaylor called the lawsuit “a sleeper,” saying it has received little media attention and may not be widely known by religious organizations. That will no doubt change with this win, she said. Given the dollar figures at stake, she expects clergy members to pressure the White House to appeal the decision to the 7th U.S. Circuit Court of Appeals in Chicago.

“The Court’s decision does not evince hostility to religion — nor should it even seem controversial,” commented Richard L. Bolton, FFRF’s attorney in the case. “The Court has simply recognized the reality that a tax free housing allowance available only to ministers is a significant benefit from the government unconstitutionally provided on the basis of religion.”

The ruling, which you can read in full, below, notes:

It is DECLARED that 26 U.S.C. § 107(2) violates the establishment clause of the First Amendment to the United States Constitution.

Defendants [the government] are ENJOINED from enforcing § 107(2). The injunction shall take effect at the conclusion of any appeals filed by defendants or the expiration of defendants’ deadline for filing an appeal, whichever is later.

In other words, the ruling right now is on hold until the appeals process is complete.

It is not known if the government will appeal, but expect a full-throated attack from the religious right demanding the law be re-written to comply with the Constitution.

Let us rejoice.

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