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Clergy reacting to court ruling against housing tax break

Published: Friday, Nov. 29 2013 4:00 a.m. MST

Annie Laurie Gaylor, co-president of the Freedom from Religion Foundation, predicted clergy would pay attention once they learned a federal judge in Wisconsin ruled the clergy housing tax break is unconstitutional.

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Annie Laurie Gaylor, co-president of the Freedom from Religion Foundation, predicted clergy would pay attention once they learned a federal judge in Wisconsin ruled the clergy housing tax break is unconstitutional.

And they are.

"The Evangelical Council for Financial Accountability (ECFA) stated the decision is 'sending shockwaves through the religious community … leaving many ministers wondering what the impact of this case will be,’ ” reported Christianity Today.

But there are also others in the religious community who have mixed views, acknowledging the tax exemption has been abused, in particular by megachurch pastors.

"I know lots of guys pulling six figures as pastors who benefit hugely from this, then, there are the rest of us in Christian education," Anthony Bradley, associate professor of theology at The King's College in New York City and a research fellow at the Acton Institute, wrote on his Facebook page, according to the Christian Post.

It certainly didn't help the clergy's case when news reports last month questioned the propriety of a 33-year-old North Carolina pastor building a $1.6 million home for his family.

Indeed, the decision by U.S. District Judge Barbara Crabb could have far-reaching financial ramifications for pastors, who currently can use the untaxed income to pay rental housing costs or the costs of home ownership, including mortgage payments and property taxes, according to the Wisconsin Journal.

Religion News Service reported that the clergy housing exemption applies to an estimated 44,000 ministers, priests, rabbis, imams and others.

RNS also had these details:

The exemption is worth about $700 million per year, according to the Joint Committee on Taxation’s Estimate of Federal Tax Expenditure.

If the ruling stands, some clergy members could experience an estimated 5 to 10 percent cut in take-home pay.

The FFRF sued the IRS, claiming a pastor's housing allowance not being taxed violates the First Amendment's separation of church and state and the Constitution's equal protection guarantee.

Crabb ruled Nov. 22 in FFRF's favor, writing that the exemption “provides a benefit to religious persons and no one else, even though doing so is not necessary to alleviate a special burden on religious exercise,” the Journal reported.

But the judge said her ruling would not take effect until any appeals are resolved. And it's anticipated the case will be appealed.

“Although this particular case does not have immediate impact, we know that pastors and others in ministry are facing challenges in our very own nation as never before,” O.S. Hawkins, president of GuideStone, said in a statement, according to Associated Baptist Press.

GuideStone, which will file a brief in any appeal, offers retirement, insurance, investment management and other financial services to the Southern Baptist and wider evangelical Christian communities, ABP reported.

Father Jonathan Greiser wrote in the Christian Century that the FFRF may have its sights on a bigger prize: property tax exemption for churches.

"The situation is rather different because nonprofits of all sorts (universities, hospitals, etc.) are exempt from paying property taxes as well as churches," he wrote. "If that exemption goes, I’m not sure how a congregation like mine would survive. I shudder to think what our property tax bill might be, certainly in six figures. Our budget can’t sustain that kind of a hit, and it’s not like we could sell a building that’s a national landmark."

FFRF's website has a page discussing the property tax exemption for churches and encourages people to keep an eye on abuses of the exemption.

Email: mbrown@deseretnews.com, Twitter: @deseretbrown

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