A federal district court judge in Wisconsin in Gaylor v. Mnuchen has decided that a tax provision favoring ministers that has been on the books for decades violates the Establishment Clause of the First Amendment (“Congress shall make no law respecting . . . the establishment [of religion]”). The provision in question allows ministers of whatever faith when provided with a housing allowance to exclude the amount of that allowance in their gross income. The Internal Revenue Service (IRS) has appealed to the Seventh Circuit, which is currently considering the case.
As the NLF pointed out in its amicus brief filed with the Seventh Circuit, the district court has bought into the “strict separationist” theory of organizations of Freedom from Religion Foundation (which brought the case; Gaylor is an executive of FFRF). Under that theory, any governmental acknowledgement or assistance to religion is verboten (again, this IRC provision does not discriminate between religions or denominations, which would violate the Establishment Clause). But the Establishment Clause is a one-way barrier (like a spike strip at a car rental return lot) that prohibits the government from encroaching on religion; it is not a two-way barrier that prohibits religion from affecting the government or the government from acknowledging or favoring religion in an evenhanded way. This has been so since the founding of the Republic, as churches and other religious organizations have almost universally been exempt from taxation.
As the NLF discussed in its brief, the First Amendment is pro-religion, recognizing its importance for a philosophical foundation for our system of government and the substantial, secular benefits that religious organizations provide to the community that would otherwise have to be shouldered by the government. It is also pro-marketplace of ideas, meaning that it is assumed that its citizenry are able to make adult choices after hearing all views, while not giving objectors a “heckler’s veto.” It recognizes that our citizenry is adult enough not to be swayed by every wind of doctrine.
We hope that the Seventh Circuit will reverse the district court and sustain the constitutionality of the ministers’ housing allowance exception. At the same time, we hope that it will reflect a proper understanding of the Establishment Clause. If it affirms the district court, it seems likely that the case would be headed to the Supreme Court.