Argument For The Constitutionality Of The Parsonage Exclusion

One of the issues that I have been following since the beginning of my blogging days is the Freedom From Religion Foundation's quixotic seeming quest to have the parsonage exclusion (Code Section 107) declared unconstitutional.  My devotion to this issue has reaped a huge dividend as it now provides a distinguished guest post. 

Edward Zelinsky is the Morris and Annie Trachman Professor of Law at the Cardozo School of Law at Yeshiva University.

I asked Professor Zelinsky to comment on The Parsonage Exemption by Adam Chodorow, which I am covering on forbes.com. His comments were a little too extensive to incorporate in the post, so I am reproducing them here.
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Prof. Chodorow’s article helpfully highlights the areas of disagreement between those who conclude that Internal Revenue Code Section 107 is unconstitutional and those of us who conclude otherwise. Speaking for myself, I see in this area debatable trade-offs and plausible choices where others tend to see absolutist decisions.

     Consider, for example, the relationship between Section 107, limited to “ministers of the gospel,” and Code Section 119 which provides a general income tax exclusion for employer-provided housing. I have argued that striking Section 107 will not eliminate the church-state entanglement about which critics of Section 107 complain. If Section 107 is stricken, much of the controversy will migrate to Section 119 as churches shift from providing cash parsonage allowances to furnishing in-kind housing.

      Section 119 raises “similarly entangling questions” as does Section 107. Among these entangling inquiries under Section 119 are determining whether a minister is an “employee” eligible for Section 119's housing-based exclusion, whether housing is provided to the clerical employee for the church’s “convenience,” what is the church’s “business” for purposes of Section 119 and what constitutes the church’s “premises.” Since both Sections 107 and 119 raise “similarly entangling questions,” it is plausible (though not compelled) for Congress to prefer the church-state entanglement inherent in Section 107 over the similar church-state entanglement flowing from the application of Section 119 to clergy and church-provided housing.

     Prof. Chodorow now writes that I have gotten this subject “exactly backward,” that Section 119 is “far less” entangling than is Section 107.

     In contrast, I see no easy metric for determining whether the church-state entanglement inherent in Section 107 is greater than or less than the entanglement flowing from the application of Section 119 to church-furnished housing. The entanglement is similar which is why the ultimate decisionmakers in this area should be democratically-elected legislators, balancing the offsetting concerns.

     I likewise have noted that the argument that Section 107 unconstitutionally entangles implies that other provisions of the Code also unconstitutionally entangle church and state. In particular, the regulatory standards for determining who is a clergywoman are the same under Section 107, FICA and the ACA. If those standards entangle unconstitutionally in the context of Section 107, they similarly entangle in the context of FICA and the ACA.

     Prof Chodorow seeks to distinguish ACA and FICA from Section 107 on the grounds that the FICA and ACA religious exemptions “are purportedly necessary to ensure that government does not force people to take actions that violate their religious beliefs.” But this characterization of the FICA and ACA exemptions does not address the issue of entanglement: If it is too entangling to define a “minister of the gospel” under Section 107, it is also unacceptably entangling to undertake the same inquiry under FICA and ACA.

     One of the pleasures of being a law professor is that I spend my days debating important issues with my colleagues. Prof. Chodorow’s paper helps to clarify the issues involved in the constitutional status of Section 107. At the end of the day, I respectfully conclude that Section 107 is a constitutionally-permitted, though not constitutionally-compelled, means of managing the church-state tensions which are inevitable when the modern government meets the modern church.

     As a matter of tax policy, I conclude that cash parsonage allowances should be taxed. However, as Chief Justice Burger noted in Walz, under the First Amendment, there is “room for play in the joints” to manage the relationship between contemporary tax systems and the contemporary church. Within that room, Congress can constitutionally adopt Section 107 and its income tax exclusion for church-provided housing and housing allowances.

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I actually think that not too many people really care all that much about things being constitutional.  Activists and advocates use the Constitution like a drunk uses a lamppost - more for support than illumination.  You can tell Professor Zelinsky cares, because of his nuanced view.  He believes that excluding cash housing allowances is both a bad idea, as a matter of tax policy, and constitutionally permissible.

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