While sanctimonious conservatives and godless liberals alike await the Supreme Court’s ruling on the Hobby Lobby case, two more suits with serious church and state implications are quietly making their way through the system.
The Freedom from Religion Foundation (FFRF) is a group of “atheists, agnostics and skeptics” with a Scientology-esque fondness for litigation. Recently the FFRF has gone after the so-called “parsonage exemption,” which allows clergy to forego paying taxes on income used for housing. Last year the FFRF sued the IRS, claiming that the exemption privileges clergy over laypersons and is thus unconstitutional.
The exemption was created to help smaller churches that can’t afford to build housing for clergy. But it also helps wealthy pastors line their own pockets. For example, between 1993 and 1995,Saddleback Church paid Rick Warren a housing allowance of around $80,000 per year, which (probably not coincidentally) was most of his salary. The IRS guideline, however, was that clergy can only claim “fair market value” of the home, and the rental value of the house in question was $60,000 a year.
The IRS wanted Warren to cough up the taxes on the difference. Instead, he sued. Before the judge could rule, Congress passed the Clergy Housing Allowance Clarification Act, changing the fair market value assessment from a guideline into a law. Warren got his exemption, but Congress believed that the Clarification Act would clear up any future discrepancies.
(Quick digression: Warren brags about living in the same house for decades. Despite an hour of ferocious Googling, I was unable to find out specific information about the place. But here are some Orange County rentals with the same market value in 2014 dollars. They’re not mansions, but they’re a lot nicer than any place I’ve ever lived in.)
Back to the FFRF suit. The IRS tried to have it dismissed, but last November, a federal judge ruled that the exemption violated the establishment clause and the suit could proceed. The IRS is appealing, making this a rare instance of the federal government trying not to take money from American citizens.
In federal terms, there isn’t much cash at stake—the estimates range from $700 to $800 million per year. But this is less about the principal than the principle. The FFRF believes that clergy aren’t paying their “fair share,” making life more expensive for the rest of us. Never mind that it works out to less than $2.50 per citizen.
The FFRF has a good chance of winning. Although I’m no constitutional scholar, the parsonage exemption does seem to privilege one set of citizens over another. I find it hard to get too worked up about it, though, because the clause is more about preventing the government from favoring a particular faith or establishing a state religion. And despite some notable outliers (cough*Joel Osteen*cough) most American clergymen don’t make much money. In 2010, while the median salary for American rabbis was about $140,000, Catholic priests averaged $25,000 and Protestant ministers $40,000. Should we begrudge them the opportunity to save a little money?
To my mind, the more intriguing suit was filed by American Atheists, who want the IRS to require churches and religious organizations to fulfill the same obligations as other nonprofit groups.
Currently most nonprofits are required to file Form 990, “Return of Organization Exempt from Income Tax.” The upshot is that their finances are public record. But religious groups don’t have to bother, which, obviously, can allow for a lot of financial chicanery.
The loss in tax revenue from such groups is estimated to be $71 billion per year, but again this is more about transparency than money. And this time I’m pulling for the atheists, because there’s no compelling argument for allowing religious organizations to be opaque about their money. And besides, there are plenty of ways to steal from nonprofits even when they do file 990s.
The interesting thing about all three cases is that they reveal the compulsion to sort out the messy business of religion in America once and for all. But the wall of separation between church and state is neither entirely solid nor porous. The better metaphor might be No Exit with a pastor and an atheist damned to each other’s company. These cases have huge implications for American religion, but regardless of which way they go, expect more litigation.
