Chicago church leaders unite to oppose massive tax threat to religious groups

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Chris Butler, a pastor at Chicago Embassy Church, leads a prayer walk in his community. Credit: Becket Fund.

Religious leaders in Chicago are fighting to end a lawsuit filed by an atheist group that would impose upwards of $1 billion in taxes for churches around the nation.

The lawsuit, Gaylor v. Mnuchin, was filed by the Freedom From Religion Foundation. The case aims to end the parsonage allowance, a federal tax provision used by religious establishments such as churches, mosques, and synagogues, which offers a housing allowance to help religious leaders live in the communities they serve.

Chris Butler, pastor of the south-side Chicago Embassy Church requested April 19 that a federal appeals court throw out the lawsuit on discriminatory grounds. Butler is joined by other ecclesial communities and Churches, including leaders from the Russian Orthodox Church Outside of Russia's Diocese of Chicago and Mid-America and Holy Cross Anglican Church.

“For the majority of churches, the pastors are like me and experience at some level the same problems that we’re trying to face in the community,” said Butler, according to a recent statement from the Becket Fund for Religious Liberty.

“If you take away even a little bit, it can become a lot of trouble quickly.”

Butler serves a predominately African-American community where he ministers to at-risk youth and the homeless in his neighborhood. He also is involved with programs to decrease local crime.

According to the Becket Fund, which has been involved in the case since January 2017, ending the parsonage allowance would “discriminate against religious groups by treating them worse than many other secular employees who receive similar tax treatment,” and would also “harm poor communities by diverting scarce resources away from essential ministries.”

Ed Peecher, bishop of the Chicago Embassy Church, said a video released by Becket that “If I am here to pastor this community, if I am here to make an impact on this community, it has to be done in the context of a relationship and it’s hard to have a relationship over distance… there is no substitute for proximity. You have to be there.”

The parsonage allowance, which was enacted by Congress 64 years ago, allows tax exemptions for religious leaders similar to exceptions in place for teachers, business leaders, and military service members, among others.

For the past century, both Congress and the IRS have recognized the convenience-of-the-employer doctrine, which upholds that employees may exclude housing benefits from their income if the benefits contribute to the convenience of the employer. This doctrine has been applied to religious and non-religious groups alike, according to Becket’s opening brief at the federal appeals court April 19.

The Becket Fund believes that if the parsonage allowance is ended, then the IRS would be discriminating particularly against religious leaders, since other secular workers receive a similar exemption.

“The same group of atheists claimed it was unconstitutional to put Mother Teresa on a postage stamp, so it’s no surprise they’re trying to sic the IRS on churches,” said Luke Goodrich, deputy general counsel at Becket.

“Treating ministers like other professionals isn’t an establishment of religion; it’s fair tax treatment.”

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