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Wednesday, July 24, 2024 | Back issues
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Atheists Lose Challenge to Tax Breaks for Clergy

CHICAGO (CN) - The 7th Circuit says an atheist organization cannot challenge the constitutionality of tax breaks for clergy even if those breaks are discriminatory.

In their lawsuit against the Secretary of the Treasury and the IRS Commissioner, the plaintiffs, led by the Freedom from Religion Foundation, argued that Section 107(2) of the Internal Revenue Code "undeniably confers a significant tax benefit upon religious clergy that is not available to nonclergy taxpayers. Only ministers can exclude cash housing allowances, a result that is patently unfair."

Earlier this year, U.S. District Judge Barbara Crabb of the Western District of Wisconsin noted that ministers have likely received billions in tax benefits, which "underscores the problem with the law, which is that it violates the well-established principle under the First Amendment that absent the most unusual circumstances, one's religion ought not affect one's legal rights or duties or benefits."

Oral arguments focused on whether or not the plaintiffs had standing to bring the suit regardless, and today, Judge Joel Flaum found that they do not.

"Plaintiffs do not have standing to challenge the constitutionality of the parsonage exemption," he wrote. "A person suffers no judicially cognizable injury merely because others receive a tax benefit that is conditioned on allegedly unconstitutional criteria, even if that person is otherwise 'similarly situated' to those who do receive the benefit."

Echoing oral arguments' confusing emphasis on "atheist ministers" and churches, Flaum noted that "plaintiffs offer no guidance on how to apply a vague 'similarly situate' standard in the tax exemption context. In the case of the parsonage exemption, would it be enough that an employee receives a housing allowance? Or must the employee be some type of organizational leader? Or perhaps an employee is not similar enough unless he is a leader who also provides guidance to a flock of followers? None of these distinctions is obviously correct.

Pointing out the lack of a concrete injury, Flaum's opinion casts doubt on future Establishment Clause challenges to tax exemptions as well.

"The concept of a 'concrete' injury is particularly elusive in the Establishment Clause context," he began.

Noting that the law does not require plaintiffs to do anything, he continued: "The plaintiffs here are members of a group (in this case, the non-religious) that is allegedly suffering illegal discrimination. But the mere fact that discrimination is occurring is not enough to establish standing, absent being "personally denied equal treatment."

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