A federal judge in Wisconsin has ruled that providing clergy with a tax-free housing allowance is unconstitutional. U.S. District Judge Barbara Crabb's decision could affect pastors across the country if the ruling is upheld by higher courts.
At the center of the controversy is a law passed by Congress in 1954 permitting clergy to designate part of their salary as "housing allowance." This portion of their income, used to pay for rent, a mortgage, property taxes, and other expenses related to housing, is not subject to federal income taxes (although it is subject to social security taxes).
Why is a 60-year-old law being overturned as unconstitutional? The suit was filed by the Freedom From Religion Foundation which argued the tax break is given to clergy on the basis of religion, which they argue is a violation of the First Amendment.
Whether or not pastors will keep their housing allowances will be determined when higher courts review the ruling from Wisconsin. With declining church attendance, ...
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