Tax exemption for parsonage allowance held unconstitutional

Get ready for some entertainment. A U.S. District Court in Wisconsin has held, in Freedom From Religion Foundation, Inc. et al. v. Lew et al., that the tax exemption for parsonage allowances religious entities provide to their clergy is unconstitutional.

Parsonage benefits come in two flavors: actual housing provided to clergy and cash allowances for housing. The Freedom From Religion Foundation sued to have both types held taxable. They lost on the first, as the court found it to be comparable to housing "provided for the convenience of the employer," which is tax-free even for non-religious employees. That makes some sense: the parsonage allowance certainly has its historical roots in the days when a clergyman was expected to live on church premises in order to be accessible to the congregation.

On the cash allowance issue, however, the Freedom From Religion Foundation won. The court pointed out that the allowance was paid in cash and was no different from cash paid to any employee that the employee used to obtain housing. Furthermore, a clergyman who used it to buy a house would benefit both from appreciation of the house and from the federal tax deduction for home mortgage interest. Thus, the exemption was a clear and unconstitutional subsidy to religious organizations.

Commentary: it is difficult to imagine a clearer case of an unconstitutional subsidy to religion. Nevertheless it is surprising that the Freedom From Religion Foundation won. The courts, on average, are highly reluctant to disturb the prerogatives of mainstream religion. Usually when a court is faced with an obvious result that it doesn't like, it finds a procedural way out. The biggest surprise in the case, and the most likely ground for reversal, is that the court held that the plaintiffs had standing to sue.

The entertainment: this is exactly the type of decision that drives some television personalities wild. Furthermore, it is not purely a figment of their imagination: this is a genuine reduction in the advantages enjoyed by organized religion. Do not expect a moderate reaction.