TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Sunday, April 29, 2018

5,000 Pastors Rally To Defend Housing Tax Break Ruled Unconstitutional

Christianity Today, 5,000 Pastors Rally to Defend Housing Tax Break Ruled Unconstitutional; Appeal: Exemptions Do More Than Just Save Pastors $800 Million a Year:

When a pastor responds to late-night prayer request or invites congregants to his home for Bible study, is he just doing his job or going beyond the call of duty?

The lawsuit over the longstanding benefit, launched by the Freedom from Religion Foundation (FFRF) seven years ago, has entered another round of appeals. The Christian defendants, represented by Becket, filed their written appeal in the Seventh Circuit Court of Appeals late last week.

Last October, the lower court judge sided (for the second time) with the atheist group’s claim that the tax-exemption for housing allowances violates the First Amendment. The pastors’ appeal makes the opposite case: that the special provisions for ministers actually keep the government from unnecessarily meddling in religious affairs.

More than 5,000 pastors from across the country have already signed on to an Alliance Defending Freedom (ADF) campaign defending the exemption. The legal team expects several Christian groups, including ADF, to file supporting documentation—amicus briefs—this week, the next step before the case goes to court later this year. (Pastors have until the end of the day on Monday to sign on to the ADF brief at

“The district court’s decision would … have devastating practical effects on ministers and communities across the country,” reads the opening brief from Becket, a legal team defending religious freedom cases. “For over a century, churches and ministers have relied on these rules to start ministries, purchase property, and help the communities they serve.”

Currently, 81 percent of full-time senior pastors in the US receive a housing allowance, according to the latest compensation figures obtained by CT’s Church Law & Tax. The typical church spends about 9 percent of its total budget on housing compensation.

According to congressional estimates, by not paying taxes on this portion of their income, American pastors save a total of $800 million a year.

Luke Goodrich, deputy general counsel for Becket, anticipates the appeals ruling will come down on the side of the pastors. The exemption for ministers dates back centuries in the US, and fits alongside today’s tax code provisions for employer-provided housing.

Update:  Sam Brunson (Loyola-Chicago), The Parsonage Allowance in Brief(s)

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What an undignified thing to do! Do those pastors have no shame?

Posted by: Eric Rasmusen | Apr 29, 2018 4:32:43 PM

If Congress can force people to pay for Obamacare as a constitutionally legitimate tax. Then why can't Congress also permit a tax break for some.

Posted by: Michael W. Perry | Apr 29, 2018 5:34:31 PM

I am truly astonished that it has taken this long to mount a court challenge to what I believe is direct government aid in the establishment of religion in violation of the 1st Amendment.
Given the incredible tax and other advantages already enjoyed by the religion industry in all its myriad forms in this country, it beggars credulity to claim that the lost of this particular tax favor is going to have any serious impact on their economic model.

Posted by: John | Apr 30, 2018 1:38:28 AM