Religious Liberty Clinic Files Brief in Support of Housing Credit for Ministers

The St. Thomas law school Religious Liberty Appellate Clinic filed an amicus brief this month in a case that threatens to affect as many as 300,000 religious congregations and their ministers, as well as retired ministers, who depend on a tax-code provision to supplement their often-modest incomes.

The brief defends the constitutionality of excluding clergy housing allowances from taxable income, a provision that is under attack in the U.S. Court of Appeals for the Seventh Circuit in Gaylor v. Mnuchin. Plaintiffs, leaders of the Freedom from Religion Foundation, argue that a tax exclusion for clergy, when leaders of nonreligious organizations are not eligible for it, violates the First Amendment’s Establishment Clause.

Those defending the provision, including the U.S. government and an interfaith set of clergy, respond that it is similar to a number of other provisions allowing exclusion of housing benefits by military service members, U.S. business employees working overseas, and employees who use housing for their employers’ businesses. By allowing all clergy to exclude housing benefits from income, the defenders say, the provision treats different faiths equally and avoids entangling the IRS in religious matters.

The brief by the St. Thomas clinic supplements this defense by detailing the consequences of invalidating the provision. The brief uses a variety of national studies and statistics to show that a solo minister receiving a median base salary ($35,000) could see his or her federal tax liability nearly triple. As a result, congregations would have to offset the added tax liability, disproportionally harming smaller congregations, congregations in urban areas, and retired ministers who receive housing allowances in their retirement packages.

The brief also shows that 61 to 81 percent of congregations—230,000 to 310,000 congregations—rely on housing allowances as a component of clergy compensation and thus face harm were the provision invalidated.

The amicus brief was drafted by Kacie Phillips ’18 J.D., working with Professor Tom Berg, who directs the Religious Liberty Appellate Clinic. The clinic filed the brief on behalf of the Christian Legal Society, the Evangelical Council for Financial Accountability, the Union of Orthodox Jewish Congregations of America, the National Association of Evangelicals, The Lutheran Church – Missouri Synod, the Council of Churches of the City of New York, and the Queens Federation of Churches.