Federal Judge Rules Clergy Tax-Free Housing Allowance Unconstitutional

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This ruling paves the way for a legal challenge to the 60-year-old law permitting pastoral housing allowances.

A federal judge in Madison, Wis., ruled last week that the tax-free housing allowance for clergy, protected under a law passed in 1954, is unconstitutional and violates the “establishment” clause in the first amendment to the Constitution. This ruling paves the way for a legal challenge to the law itself permitting pastoral housing allowances.

The lawsuit was filed by the Freedom From Religion Foundation and was ruled on by U.S. District Judge Barbara Crabb. The FFRF maintained that the law allows pastors to use untaxed income to purchase a home, then deduct interest paid on the mortgage and property taxes. “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. This conclusion makes it unnecessary to consider plaintiffs’ equal protection argument,” wrote Crabb in her decision.

According to The Christian Post, pastors are not happy about the decision. Doug Webster, pastor of The Following church in Lake Forest, Calif., commented, “My life as a pastor is special and significant but rarely secure financially. Ministry is already taxing enough. Bleeding a few hundred dollars more monthly from me is a sad commentary, especially if the motivation is greed, envy or pride. I will render unto Caesar what is Caesar’s but I advise prudence of sitting judges to encumber the keepers of the spring. Where will the village turn for counsel, support and prayer when the entire community has turned brackish?”

Pastor Chris McCombs of Broadman Baptist in Cuyahoga Falls, Ohio, agrees. “If statistics are true, most of us (pastors) worship on any given Sunday with 100 or less people in their congregation. They are not paying their pastors big bucks, they just don’t have that kind of money … What the atheist group doesn’t realize is that it’s not about religion. They are hurting an actual family.” 

“This could be the beginning of a first step towards taxing the church.” said McCombs. “I see this as a domino effect. If this doesn’t get overturned now, it will hurt the individual pastors who do not make a lot of money which are the vast majority of them.”

The total of tax-free housing allowances for clergy is estimated at $1 billion annually.

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