A federal court of appeals has rejected an atheist group’s lawsuit seeking to strike down a 60-year-old tax provision protecting ministers, notes the Becket Fund. The ruling allows ministers of all faiths to continue receiving housing allowances. “This is a great victory for separation of church and state,” said Luke Goodrich, Deputy General Counsel of the Becket Fund of Religious Liberty. “When a group of atheists tries to cajole the IRS into raising taxes on churches, it’s bound to raise some eyebrows. The court was right to send them packing.”
Aside from the question of constitutionality, the clergy exemption raises a question that many people — whether religious or not — are likely to be wondering: Why exactly do ministers receive a tax exemption for their housing allowance?
To answer the question we must first consider how taxation of church property, including clergy housing, has historically been considered.