Congress Rushes to preserve Clergy Tax Breaks

CONGRESS RUSHING CLERGY TAX BREAK IN HOPES OF NEUTRALIZING U.S. COURT RULING

The House of Representatives yesterday passed legislation that would preserve a decades-old policy of giving tax breaks to members of the clergy toward the costs of their housing.

   With little fanfare or advance publicity, the Clergy Housing Allowance Clarification Act of 2002 passed during a roll call vote, 408-0. The measure was introduced on April 10, and the bill fast-tracked through the legislative hopper without public hearings or other input. Debate and discussion of the measure lasted yesterday from 2:58 PM to 3:19 PM.

   Sponsored by Rep. Jim Ramstad (R-Minn.), the legislation is designed to shore-up a government policy which has been in place since 1921 giving ministers, priests and other clerics an exemption for the cost of housing and home ownership. Ramstad told reporters that loss of the special privilege could cost the clergy an estimated $2.3 billion over the next five years.

    "We cannot allow this important tax provision to fall," Ramstad declared.

   But why the rush?

   One reason is that the U.S. 9th Circuit Court of Appeals is considering an examination of the exemption thanks to an obscure tax court case, WARREN v. COMMISSIONER OF INTERNAL REVENUE. That dispute originated when Rev. Richard D. Warren of the Saddleback Valley Community Church in Orange County, California attempted to write off his $100,000 salary from church trustees as a "housing allowance." The IRS challenged the deduction, arguing that only the fair market rental value of the parsonage was deductible. A tax court sided with the minister, and the IRS appealed.

   When the case reached a panel of the 9th Circuit, though, Judge Stephen Reinhardt voiced questions over the constitutionality of the exemption. That precipitated an exchange described as "unusual and quarrelsome," as jurists debated whether the court should further examine the tax break.

   The issue, Reinhardt wrote is "to what tax deduction is Reverend Warren entitled? If .... under the constitution, Rev. Warren is not entitled to any tax deduction at all because such a deduction would violate the First Amendment, then it is not possible to decide the case on non-constitutional grounds and reach the correct result."

   The case is even more awkward since, as University of Southern California law professor Erwin Chemerinsky says, "The government would never raise the constitutionality of its own regulation."

   "The ministers wouldn't want to disturb their tax deduction, either," he adds. "This is for churches, synagogues and mosques a really big deal." He added that the IRS policy amounts to "government subsidizing religion."

   Chemerinsky has been called by the court to advise the judges on how to handle the issue. Neither the IRS, nor attorneys for Rev. Warren, want to see the regulation eliminated. Neither does an obscure group known as the National Association of Church Business Administration which has entered the fray with an amicus ('friend of the court") brief.

   On Capitol Hill, there is little effort to conceal the fact that the "Clergy Housing Allowance Clarification Act of 2002" benefits organized religion. Rep. Earl Pomeroy (D-ND) said that the exemption was crucial especially in rural areas and communities which find it difficult to attract clergy. "A clergy's home is not just his shelter, but a central meeting place for all members of the congregation," Pomeroy added.

   As for the Ninth Circuit daring to examine the constitutionality of the clergy perk, Rep. Ramstad accused the court of "judicial activism at its worst."

   "If this isn't a blatant example of government protecting 'special rights' for organized religion," said American Atheists President Ellen Johnson, "I don't what is."

   H.R. 4156 now moves to the U.S. Senate for possible further action.