Why a former minister is challenging churches' tax privileges in US

This month, a federal judge in Wisconsin ruled that tax-free housing for clergy is unconstitutional, while in Texas, a federal judge ruled that the governor infringed on an atheist group's constitutional rights when he removed their 'winter solstice' nativity. Dan Barker is the former Evangelical behind both cases.

When Dan Barker was a Pentecostal minister in California, he knew he could exclude his clergy housing allowance from his income tax returns, taking advantage of an IRS benefit that the federal government grants to “ministers of the Gospel” – though not to anyone else.

Back then, he didn’t give much thought to this special social benefit, which today gives American ministers a tax break worth some $800 million a year. Today, his efforts stand behind the ruling of a federal judge in Wisconsin who declared this benefit a violation of the separation of church and state.

In the 1970s, Mr. Barker was never that concerned about the nitty gritty of social policy. And he felt many of his fellow religious conservatives, who were getting involved in the emerging “religious right,” were too caught up with worldly concerns.

“I was a pure soul-winner,” Mr. Barker says. “I never preached about homosexuality or abortion or birth control or race or anything relevant to the so-called culture wars.”

By age 16, he was working for the televangelist Kathryn Kuhlman – a forerunner of what today is known as “the prosperity gospel.”

“I was the true believer, a Bible-believing fundamentalist,” says Barker, who went on to be an evangelist himself for nearly 20 years, both as a Christian musician and preacher. “I was a person praying for miracles and faith healings – all of that,” he says. “I believed it.”

He didn’t stop believing all at once, but over the years Barker experienced what can only be called a dramatic conversion.

It was as if he had been born again, his life turned inside out. He married a third-generation atheist activist, Annie Laurie Gaylor, eventually joining her as the co-president of the Freedom From Religion Foundation in Madison, Wis.

Now Barker and his wife are on the vanguard of the so-called culture wars, in particular the push and pull in the legal battles that draw the lines between church and state, and as caught up with worldly concerns as his former Evangelical peers.

And the legal push and pull has become more volatile over the past few years. In some ways, the Supreme Court’s epoch-changing 2015 decision making same-sex marriage a constitutional right has galvanized religious conservatives to work to strengthen the country’s robust traditions of religious freedom – and even carve out new spaces for conscience, especially for those with religious objections to same-sex marriage.

At the same time, the religious landscape has begun to shift profoundly. Like Barker, millions of Americans have left their faiths. Unlike Barker, many still believe in God, but they have become “nones,” or those who no longer identify with, or trust, religious institutions.

Even among Evangelicals, declining membership has revealed a growing split between young Christians and church elders, as Millennials more and more reject their churches’ conservative activism and opposition to same-sex marriage.  

“There is a trend in the United States toward challenging the privileges that churches and other religious groups have enjoyed throughout the nation’s history,” says Lloyd Hitoshi Mayer, professor of law at the University of Notre Dame in South Bend, Ind.  

A growing number of people have continued to question the reasoning behind various kinds of tax benefits religious groups have long received. In 2015, HBO’s “Last Week Tonight with John Oliver” did a popular exposé, “Our Lady of Perpetual Exemption,” on how certain wealthy televangelists purchase palatial houses and private jets for their ministries, all with the tax-free contributions they receive.

And a number of contentious church-state issues surrounding the issue of taxes loom: tax breaks for school choice and voucher programs that in effect subsidize religious institutions; taxpayer funds for hurricane relief efforts; and the future of the Johnson Amendment, which forbids tax-exempt religious organizations from participating in political campaigns.  

In Wisconsin, US District Court Barbara Crabb ruled that the IRS’s “parsonage allowance,” which allows “ministers of the Gospel” to exclude mortgage payments, utility bills, and other housing-related expenses, was a violation of the First Amendment’s establishment clause, essentially respecting religion over other groups.

“A desire to alleviate financial hardship on taxpayers is a legitimate purpose, but it is not a secular purpose when Congress eliminates the burden for a group made up of solely religious employees but maintains it for nearly everyone else,” Judge Crabb wrote. “The important point is that many equally deserving secular employees (as well as other kinds of religious employees) could benefit from the exemption as well, but they must satisfy much more demanding requirements despite the lack of justification for the difference in treatment.”

Still, nonprofit organizations, including educational, scientific, and charitable groups, have long been recognized as serving a special function in society.

The Supreme Court in 1970 strongly affirmed the broader tax-free status of churches, saying “certain entities that exist in a harmonious relationship to the community at large, and that foster its ‘moral or mental improvement,’ should not be inhibited in their activities by property taxation or the hazard of loss of those properties for nonpayment of taxes.” Churches are “beneficial and stabilizing influences” on a community’s common life together and within the public interest.

This has long been a powerful principle in American society, both as a matter of jurisprudence and social policy, says Professor Mayer. “The view is that it is good to have religious organizations of all stripes in our communities, that they make better people, a better society.”

“Of course, they provide not just lots of good things that you can measure, like soup kitchens and homeless shelters,” he continues. “I think that if you just focus on those tangible benefits, which secular groups do as well, you’re missing something important about how Americans view religious groups, which is, they are more than people who help the poor. They also help everyone to be better, to be better neighbors, to be better community members, and we want to encourage that.”

And part of the purpose of the “free exercise” clause in the First Amendment, many scholars say, is to create a special and unique place for religion in American life with limited entanglements with the government.

“And we don’t have any more entangling relationship than the relationship between the taxpayer and the tax collector,” says Edward Zelinsky, a professor at the Cardozo School of Law in New York and the author of the recent book, “Taxing the Church: Religion, Exemptions, Entanglement, and the Constitution.” “So if the government taxes a church, that doesn’t separate them, it entangles them.”

But many have, in fact, begun to question whether religious groups do indeed exist in a “harmonious relationship” within the community, especially as many conservative churches become more aggressively partisan.

For the past few years, religious conservatives have mounted an assault on the IRS’s Johnson Amendment. For the past decade, The Alliance Defending Freedom has sponsored “Pulpit Freedom Sundays,” a kind of civil disobedience in which pastors openly support political candidates from the pulpit, daring the IRS to revoke their tax-exempt status.

“As a pastor, you should be free to teach as God leads, without interference from the government,” the organization says on its website. “But for more than 60 years, the IRS has used the Johnson Amendment to censor what you and other pastors preach from the pulpit.”

In fact, the IRS rarely revokes the tax-exempt status of religious organizations engaging in political advocacy. And despite a recent executive action by President Trump, who had promised to “totally destroy” the amendment, both critics and supporters say it basically maintains the status quo.  

Yet the efforts to repeal the Johnson Amendment also disrupt what had been a kind of social compact between society and nonprofits. “Essentially, it allows organizations a ‘double subsidy’ as both the financial donor can exempt their donation from their personal tax obligation, and the recipient nonprofit is also not taxed on the gift,” says Justin Dion, professor at Western New England University School of Law in Springfield, Mass.

So the IRS policy serves a useful purpose, says Professor Zelinsky,

“We really don’t want churches and other tax-exempt institutions being used to funnel tax exempt money into politics, he says. “On the other hand, I think the ministers who argue that the Johnson Amendment unfairly inhibits their internal communications and their First Amendment rights are correct.”

But Zelinsky and others believe the ongoing disputes about breaks for religious organizations have been afflicted by the country’s miasma of polarized partisanship, which masks opportunities for real consensus.

The debate over school choice programs, for example, may already be resolved, says Mark Goldfeder, a lecturer at Emory Law School in Atlanta and a senior fellow for the Center for the Study of Law and Religion. Instead of focusing on the distinctions between secular or religious purposes, the arguments have shifted to public versus private funding.

There are already 17 US states that have instituted versions of “scholarship tax credit programs,” which allow individuals and corporations to set aside a portion of the state taxes they owe and donate them to nonprofit organizations that issue scholarships to grade school and high school students.

“It’s interesting in the overall scheme of things, because what these programs do, they take religion out of it,” says Mr. Goldfederer, who notes that such programs have already passed constitutional muster. “So we’re no longer focusing on the religious-secular distinction, which is fraught with all kinds of issues.”

In the recent Trinity Lutheran case, the Supreme Court ruled 7-to-2 that governments could not exclude religious organizations from any taxpayer-funded grants, offered to any other organization, so long as the grant served a secular purpose.

In Congress, lawmakers have introduced a “fix” to the Johnson Amendment, allowing pastors to exercise their free speech, but limiting the amount of money that could be used when supporting political candidates.

Although Barker calls the Freedom From Religion Foundation “strict separationists,” he offers a more nuanced view on issues such as nativity scenes in front of government buildings or in public places like town squares.

“In a public forum, you get a permit to display a nativity scene, you get a permit to have a rally,” the atheist activist says. “And when you’re done, you take it down, you leave. Everyone knows it’s not the government speaking, it’s ‘we the people,’ and that’s great.”

Barker sued Republican Texas Gov. Greg Abbott two years ago after he ordered the atheist group’s nativity parody removed from the state Capitol. The “winter solstice” featured cardboard cutouts of the founding fathers and the Statue of Liberty gazing down at the Bill of Rights, lying in a manger.

Earlier this month, a federal judge ruled the Texas governor’s action “violated [the Freedom From Religion Foundation's] clearly established First Amendment right to be free from viewpoint discrimination in a limited public forum.”

“We’d rather keep divisive religious – and irreligious – views out of state capitols,” said Ms. Gaylor in a statement. “But if the government creates public forums, and permits Christian nativities in them, there must be room at the inn for the rest of us.”

Both Gaylor and Barker changed their compensation packages to reflect a housing allowance as they prepared to challenge the IRS housing allowance, after the Seventh Circuit Court of Appeals threw out an earlier ruling saying they didn't have standing to sue.

“If all of the leaders and CEOs of nonprofits, if all of us were getting the same break, then we wouldn’t complain, because there wouldn’t be any favoritism,” Barker says. “I used to get it when I was a minister, but now that I’m working for FFRF, I don’t get it anymore, so the government is picking favorites and giving the benefit to one group, as if the clergy were somehow on a higher level or special class of citizens from the rest of us. So it’s a matter of fairness.”

“But I think this American experiment is beautiful,” Barker says. “We were the first country in history to formally separate religion and government, and it’s been working, and it’s been working wonderfully, even if there are people who resist that idea.”