Appeals Court Rules That Law Giving Clergy Exemption from Paying Income Taxes on Their Housing Allowance is Constitutional

Pastor Chris Butler, who oversees a ministry in Chicago, Illinois. | Courtesy of Becket

The U.S. Court of Appeals for the Seventh Circuit ruled Friday that a law giving clergy an exemption from paying income taxes on their housing allowance is constitutional. The ruling protects religious leaders nationwide from having to pay nearly $1 billion more each year in taxes.

The court’s unanimous decision in the case Gaylor v. Mnuchin reversed a district court’s ruling in 2017 in favor of the atheist legal group Freedom From Religion Foundation, which argued that excluding pastors’ housing allowance from their taxable income was unconstitutional.

A group of clergy who rely on the housing allowance appealed that decision to the Seventh Circuit and were represented by the law firm Becket.

“The tax code treats ministers the same as hundreds of thousands of nonreligious workers who receive tax-exempt housing for their jobs — that’s not special treatment, it’s equal treatment,” said Luke Goodrich, vice president and senior counsel at Becket, which defends religious rights. “The court rightly recognized that striking down the parsonage allowance would devastate small, low-income houses of worship in our neediest neighborhoods and would cause needless conflict between church and state,” he added.

Pastor Chris Butler of the Chicago Embassy Church, a predominantly African-American congregation, says his church can’t afford to pay him a full salary, but it offers him a small housing allowance so he can afford to live near his church.

“This ruling is a victory not just for my church but for the needy South Side Chicago community we serve — our youth, our single mothers, our homeless, our addicted, and our victims of gang violence,” Butler said. “I am grateful that I can continue serving them and living side by side with them to make our neighborhood a safer, more peaceful place.”

In a previous interview with The Christian Post, Joe Davis, counsel at Becket, said the estimate of $1 billion per year in additional taxes comes in part from a report by the U.S. Department of the Treasury, which “estimates the housing allowance at $0.97 billion for 2018, and expects that it will actually exceed $1 billion this year.”

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SOURCE: Christian Post, Melissa Barnhart