Parish Exemption

The federal statute creating the parish exemption, as administered by the IRS and the Treasury Department, violates the Establishment Clause of the First Amendment by providing preferential tax benefits to ministers of the gospel. The allowance or grant of tax benefits exclusively for ministers of the gospel under 28 U.S.C. § 2201 that 26 U.S.C. §107 should be repealed.

The exemptions permit clergy to deduct from their taxable income housing allowances furnished as part of compensation. The unique benefits to clergy date to 1954, when Congress amended the tax code to permit all clergy to exempt their housing costs from their incomes taxes. U.S. Rep. Peter Mack, author of the amendment, declared:

“Certainly, in these times when we are being threatened by a godless and antireligious world movement we should correct this discrimination against certain ministers of the gospel who are carrying on such a courageous fight against this foe. Certainly this is not too much to do for these people who are caring for our spiritual welfare.”

Ministers, who are paid in tax-free dollars, may deduct their mortgage interest and property tax payments. Under federal law, allowances paid to “ministers of the gospel” are not treated as taxable income. Because “ministers of the gospel” are singled out as a class to uniquely claim these benefits, the statutes convey a governmental message of endorsement and unconstitutionally favor religious employees and institutions over others.

The income taxation of ministers of the gospel under the general rules that apply to other individuals would not interfere with the religious mission of churches or other organizations or the ministers themselves. The statutes are not an accommodation of religion, therefore, but a subsidy.

The §107 tax exclusion can be used by ministers for virtually all of the costs of home ownership, including: Down payment on a home; home mortgage payments, including both interest and principal; real estate taxes; personal property tax; fire and homeowners liability insurance; rental payments; and cost of acquiring a home (i.e., legal fees, bank fees, title fees, etc.).

The housing allowance can also be used for maintaining a home. Eligible costs or expenses include: Home improvements; minor repairs; utilities; furnishings and appliances (dishwasher, TV, refrigerator, pool table, vacuum cleaner, personal computer, etc.); home decor (rugs, curtains, plaints, knickknacks, wallpaper, paint, towels, bedding, etc.); lawn care (lawn mower, garden hose, sod, landscape tools, etc.); basic telephone services; cable TV; Internet service; pest control; and miscellaneous (light bulbs, cleaning supplies, carpet cleaning, etc.).

the IRS and Treasury Department must make sensitive, fact intensive, intrusive, and subjective determinations dependent on religious criteria and inquiries, such as whether certain activities constitute ‘religious worship’ or ‘sacerdotal functions;’ whether a member of the clergy is ‘duly ordained, commissioned, or licensed;’ or whether a Christian college or other organization is ‘under the authority of’ a church or denomination’; or whether a full-time cantor in the Jewish faith qualifies as a minister of the gospel. These and other determinations result in ‘excessive entanglement’ between church and state contrary to the Establishment Clause.

The general public fails to realize the scope of this preferential treatment, how many everyday expenses may be excluded from taxable income for ministers and even retired ministers. They should know that laypersons pay much more because individual clergy pay so much less.