When Ric Stanghelle finished putting his third son through college, he thought he’d put the extra money toward retirement. Now the Wisconsin pastor might spend it on taxes.
The Obama administration and a broad spectrum of religious groups are urging the Seventh Circuit Court of Appeals to reconsider a federal judge’s 2013 ruling that pastors’ tax-exempt housing allowances violate the First Amendment.
A congressional report says the exemption is worth about $700 million a year. Stanghelle, who receives a $23,400 housing allowance, would pay more than $5,000 each year if the Freedom from Religion Foundation wins its case.
The exemption focuses on “housing provided for the employer’s convenience.” Assistant attorney general Kathryn Keneally told the Seventh Circuit that pastors are akin to “seamen living aboard ships, workers living in ‘camps,’ cannery workers, and hospital employees.”
A pastor’s house is an “extension of the church” and used as “an office, a study, a place of counseling, a place of small meetings, such as boards or committees, and a place in which to entertain and lodge church visitors and guests,” according to her brief.
Church-owned parsonages (unchallenged in this case) were more common when the exemption was created more than 60 years ago. But today, only 11 percent of pastors live in such housing, while 87 percent receive a housing allowance, according to the 2014–2015 Compensation Handbook for Church Staff. Meanwhile, studies suggest that most American workers now take work home with them, thanks to smartphones and tablets. Is clergy home life still so different that it warrants its own exemption?
“I’d characterize it as an anachronistic benefit … that once was somewhat narrowly focused,” said tax attorney Case Hoogendoorn, who often represents churches and nonprofits. “But it has become an indefensible perk for everyone who is ordained.”
Becket Fund for Religious Liberty attorney Luke Goodrich, who filed an amicus brief on behalf of Southern Baptist, Eastern Orthodox, Muslim, and Hare Krishna bodies, disagrees. Many churches still require the pastor to care for church property, and the government can’t parse who warrants the exemption. “It’s perfectly reasonable for Congress to say that ministers face a lot of burdens on their housing that other employees don’t.”
CT earlier asked experts whether Congress should change the housing allowance, editorialized on parsonage allowances, and looked at the history of clergy housing tax breaks.
