Ministerial Magic: Tax-Free Housing and Religious Employers

16 Pages Posted: 22 Apr 2019 Last revised: 24 May 2019

See all articles by Bridget J. Crawford

Bridget J. Crawford

Pace University School of Law

Emily Gold Waldman

Pace University - School of Law

Date Written: April 4, 2019

Abstract

Religious organizations enjoy many of the same benefits that other non-profit organizations do. Churches, temples and mosques, for example, generally are exempt from local real estate taxes. Economically speaking, a tax exemption has the same effect as a subsidy; freedom from tax liability means that the organization can devote its financial resources to other activities. But where an exemption afforded to a religious employee is broader than the equivalent exemption available to a secular employee, a significant Establishment Clause concern is raised. The parsonage exemption of Internal Revenue Code Section 107 presents such an issue: ministers are permitted to exclude cash housing allowances from their taxable income as a matter of course, even though the equivalent exemptions for secular employees are far more limited. Recently, however, in Gaylor v. Mnuchin, the United States Court of Appeals for the Seventh Circuit rejected the argument that the parsonage exemption violates the Establishment Clause. This Essay evaluates the court’s reasoning and suggests that the decision minimized the extent to which the parsonage exemption provides active governmental support for religion. This minimization, we argue, led to a distorted Establishment Clause analysis and the wrong result. We also address an issue lurking in the background: the intersection between the parsonage exemption and sex discrimination, given that some religions do not permit women to serve in religious leadership roles that would qualify them as ministers under Section 107. Although the stronger constitutional argument against the parsonage exemption stems from the Establishment Clause, both issues raise important policy concerns.

Keywords: parsonage exemption, religious employers, tax-free housing, Establishment Clause, First Amendment, sex discrimination

JEL Classification: K1, K10, K34

Suggested Citation

Crawford, Bridget J. and Waldman, Emily Gold, Ministerial Magic: Tax-Free Housing and Religious Employers (April 4, 2019). University of Pennsylvania Journal of Constitutional Law Online, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3366964

Bridget J. Crawford (Contact Author)

Pace University School of Law ( email )

78 North Broadway
White Plains, NY 10603
United States

Emily Gold Waldman

Pace University - School of Law ( email )

78 North Broadway
White Plains, NY 10603
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
56
Abstract Views
363
rank
369,517
PlumX Metrics