MADISON, Wis. — A Wisconsin judge has given a green light to a lawsuit challenging a federal law that exempts clergy from paying income taxes on the fair rental value of their homes.
U.S. District Judge Barbara Crabb ruled Aug. 29 that the Madison, Wis.,-based Freedom From Religion Foundation has legal standing to challenge the constitutionality of a 1954 law that grants certain tax benefits to “ministers of the gospel.”
The group dropped a similar lawsuit in 2011 after the U.S. Supreme Court ruled in a case that individuals can sue the government only if they are affected directly by a law and not just because they are taxpayers. The Freedom From Religion Foundation, which “advocates for the separation of church and state and educates on matters of non-theism,” responded by changing its salary structure to include housing allowances, which employees cannot claim on their tax returns because they are not members of the clergy.
The plaintiffs contend that the law violates the First Amendment ban on establishing religion and the Fifth Amendment guaranteeing equal protection under the law.
Current law allows employers to set aside a portion of a minister’s compensation to be used to rent or purchase a home, including furnishings and utilities. The exemption’s original intent was to reduce the tax burden on ministers, assuming they were poorly paid, and in acknowledgement that clergy conduct much of their ministry from their home, making their residence akin to a home office.
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