Dr. Warren, the Parsonage Exclusion, and the First Amendment
Posted: 31 Mar 2002
In this article, Professor Zelinsky discusses the recent order of a three-judge panel of the Court of Appeals for the Ninth Circuit in Warren v. Commissioner. In that order, the appellate panel has sua sponte questioned the constitutionality of section 107(2), which excludes from gross income the cash rental allowance provided to a minister of the gospel.
Of central concern to the Ninth Circuit panel is the decision of the United States Supreme Court in Texas Monthly, Inc. v. Bullock, which struck on Establishment Clause grounds a Texas sales tax exemption limited to religious literature.
According to Professor Zelinsky, the Warren court's inquiry highlights the tensions and uncertainties of the First Amendment doctrine governing tax exemptions for religious persons and entities. Texas Monthly indicates that exclusions such as section 107 are appropriately viewed as tax subsidies and that when restricted to religious institutions and actors, these subsidizing exclusions run afoul of the Establishment Clause. On the other hand, an earlier case, Walz v. Commissioner, focuses more on Free Exercise concerns and suggests that for First Amendment purposes, tax provisions like section 107 properly accommodate the autonomy of sectarian entities and persons.
A trial or appellate judge seeking to follow the Supreme Court's most recently expressed sentiments will, per Texas Monthly, strike section 107 on Establishment Clause grounds.
If, on the other hand, the accommodationist jurisprudence of Walz controls, section 107 (like the property tax exemption challenged in Walz) survives First Amendment scrutiny as an expression of Free Exercise considerations.
As a normative matter, Professor Zelinsky concludes that there are sound reasons for preferring the Walz approach to Texas Monthly. Consequently, the Ninth Circuit (or whoever confronts the issue) should resolve the tension between Texas Monthly and Walz by holding section 107 constitutional.
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