The Brooklyn Law School Library New Books List for May 1, 2018 has 23 print titles and 54 E-book titles. There are so many topics covered in the list but the pending case of Gaylor v. Mnuchin which involves permitting housing allowances given by denominations to clergy to be exempt from taxation makes one book on the list highly topical.
The book is Taxing the Church: Religion, Exemptions, Entanglement, and the Constitution by Edward A. Zelinsky, Professor of Law at Cardozo School of Law. It explores the taxation and exemption of churches and other religious institutions. This exploration reveals that churches and other religious institutions are treated diversely by the federal and state tax systems. Sectarian institutions pay more tax than many believe. In important respects, the states differ among themselves in their respective approaches to the taxation of sectarian entities. Either taxing or exempting churches and other sectarian entities entangles church and state. The taxes to which churches are more frequently subject – federal Social Security and Medicare taxes, sales taxes, real estate conveyance taxes – fall on the less entangling end of the spectrum. The taxes from which religious institutions are exempt – general income taxes, value-based property taxes, unemployment taxes – are typically taxes with the greatest potential for church-state enforcement entanglement. It is unpersuasive to reflexively denounce the tax exemption of religious actors and institutions as a subsidy.
For many years, religious denominations in the United States have been largely exempt from paying taxes. However, some cracks are beginning to show in that armor. Principal among them is a suit awaiting a hearing by the 7th U.S. Circuit Court of Appeals in the case of Gaylor v. Mnuchin, in which the Freedom From Religion Foundation is challenging the constitutionality of a 1954 law, the so-called “parsonage allowance” under 26 U.S.C. § 107(2) that permits “ministers of the gospel” to receive cash housing allowances tax free, a potential violation of the Establishment Clause. The case is on appeal to the United States Court of Appeals For The Seventh Circuit seeking to reverse the district court’s opinion and affirm the constitutionality of the minister’s housing allowance under 26 U.S.C. § 107(2).