A federal judge in Madison has struck down as unconstitutional a law that gives clergy tax-free housing allowances, in a ruling that could have far-reaching ramifications for religious leaders who have fought for years to keep the substantial financial benefit.
Under the federal law passed in 1954, a “minister of the gospel” doesn’t pay income taxes on compensation that is designated part of a housing allowance. The Freedom From Religion Foundation, based in Madison, argued that the law discriminates against secular employees.
The benefit saves clergy, including non-Christian religious leaders, $800 million a year in taxes, according to the latest estimate from the congressional Joint Committee on Taxation.
Under the law, housing allowances paid as part of clergy salary can be subtracted from their taxable income. The Freedom from Religion Foundation argued that a clergy member can use the untaxed income to purchase a home, and then, in a practice known as “double dipping,” deduct interest paid on the mortgage and property taxes. WISCONSIN STATE JOURNAL
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