Beliefnet
April 16, 2002

WASHINGTON (AP) - Since 1921, ministers, priests and rabbis have received a tax break for the costs of their housing. Members of Congress acted Tuesday to block a federal court from invalidating that exemption.

Lawmakers are seeking to protect the so-called parsonage exemption before the 9th U.S. Circuit Court of Appeals in San Francisco has an opportunity to decide whether the tax break passes constitutional muster.

Legislation that would clarify the exemption and pre-empt that case passed the House 408-0, moving on to the Senate.

Rep. James Ramstad, R-Minn., said loss of the exemption would cost clergy members $2.3 billion over the next five years.

``We cannot allow this important tax provision to fall,'' Ramstad said.

Rep. Earl Pomeroy, D-N.D., said the exemption was particularly important in rural areas where churches, synagogues, mosques and temples would be less able to compensate for its loss, making it harder to attract clergy.

``A clergy's home is not just his shelter, but a central meeting place for all members of the congregation,'' Pomeroy said.

Echoed by other sponsors, Ramstad accused the court of ``judicial activism at its worst'' because the judges were initially asked by the Internal Revenue Service only to determine whether a Los Angeles-area Baptist minister, the Rev. Richard Warren, had claimed too large a tax deduction for his home.

The IRS, which appealed a lower court decision it lost, contended that Warren was due only $59,479 under the ``fair rental value'' principle instead of the $79,999 tax deduction he had claimed for a home he purchased for $360,000 in 1992.

Instead of ruling on that narrow issue, the 9th Circuit judge asked a University of Southern California law professor to file a brief in the case by May 3 addressing whether the exemption violates the separation of church and state principle. That professor, Erwin Chemerinsky, has said the exemption amounts to ``government subsidizing religion.''

Those questions would become moot if Ramstad's bill clears the Senate and is signed into law by President Bush. The legislation actually puts into law the more restrictive IRS practice of allowing clergy to deduct the ``fair rental value'' of their homes.

In practice, the exemption permits a clergy member to deduct from taxable income the portion of church earnings that are attributed to housing costs. The bill is H.R. 4156.

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