William Thornton is the SBC Plodder, and this post originally appeared there.
It has been ruled so by a federal district judge in Wisconsin. I don’t know how widely the decision is to be applied.
My CPA blogging friend, Peter Reilly has greater understanding of this than I, so here is what he says:
The Freedom From Religion Foundation has won a stunning victory in the United States District Court For The Western District Of Wisconsin where Judge Barbara Crabb has ruled that a substantial tax benefit enjoyed by many thousands of clergy – ministers, priests, rabbis, imams and others – is unconstitutional.
The ruling concerns only those housing allowances which are paid in cash, not those claimed by ministers living in pastoriums. I’d guess that most SBC pastors are in the former group and, absent subsequent action, face some serious recalibration of their compensation and tax payments.
The Freedom From Religion Foundation comments on the victory:
The Freedom From Religion Foundation and its co-presidents Annie Laurie Gaylor and Dan Barker have won a significant ruling with far-reaching ramifications declaring unconstitutional the 1954 “parish exemption” uniquely benefiting “ministers of the gospel.”
“May we say hallelujah! This decision agrees with us that Congress may not reward ministers for fighting a ‘godless and anti-religious’ movement by letting them pay less income tax. The rest of us should not pay more because clergy pay less,” Gaylor and Barker commented.
U.S. District Judge Barbara B. Crabb for the Western District of Wisconsin issued a strong, 43-page decision Friday declaring unconstitutional 26 U.S. C. § 107(2), passed by Congress in 1954. Quoting the Supreme Court, Crabb noted, “Every tax exemption constitutes subsidy.” The law allowed “ministers of the gospel” paid through a housing allowance to exclude that allowance from taxable income. Ministers may, for instance, use the untaxed income to purchase a home, and, in a practice known as “double dipping,” may then deduct interest paid on the mortgage and property taxes.
“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.”
Crabb wrote: “Some might view a rule against preferential treatment as exhibiting hostility toward religion, but equality should never be mistaken for hostility. It is important to remember that the establishment clause protects the religious and nonreligious alike.”
You can expect GuideStone, the Ethics and Religious Liberty Commission, and every SBC leader living and breathing to be in a raging inferno over this decision and to be furiously lobbying for some legislative amelioration.
I haven’t read the decision and don’t know exactly what this means for clergy around the country. Let the lawyers and experts jump on it.
Alas, Sacred Clergy Tax Break in some trouble.
Those of you who live in pastoriums may now crow a bit, since you aren’t affected by the decision.