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Originally published on Forbes.com.

Men and women doing the same job, but the women end up with more taxable income than the men? Is that the law? I mean why not? After all the Apostle Paul wrote:

Let your women keep silence in the churches: for it is not permitted unto them to speak; but they are commanded to be under obedience as also saith the law.

And if they will learn any thing, let them ask their husbands at home: for it is a shame for women to speak in the church.

And Congress has implicitly incorporated that sentiment into the Internal Revenue Code.

Constitutional Controversy

About a year and a half ago (October 2017) Judge Barbara Crabb ruled that Section 107(2) of the Internal Revenue, which allows “ministers of the gospel” to exclude from taxable income housing allowances (with no dollar limits) unconstitutional.  In her view, it violates the Establishment Clause of the First Amendment.

107(2) violates the establishment clause because it does not have a secular purpose or effect and because a reasonable observer would view the statute as an endorsement of religion.

That was Judge Crabb’s second time ruling 107(2) unconstitutional.  The first time the Seventh Circuit overturned her decision on standing.  On Friday the Seventh Circuit overturned the second Crabb ruling, this time on the merits.  I covered that here and will be covering it more, but this piece started before that and is inspired by Amanda Retberg, who reached out to me earlier this month.

Where Is The Sex Discrimination?

How is it that 107(2) smuggles sex discrimination into the Code?  As misportrayed in the film On The Basis of Sex, Department of Justice attornies in 1973, somehow or other, compiled a list of all the provisions in the United States Code that distinguished between men and women.  They left out 26 USC 107 (Rental Value of Parsonage).

It is a reasonable omission because the sex discrimination is implicit in the term “minister of the gospel” rather than explicit. In the right circumstances, men and women doing exactly the same job are taxed differently.  The men can exclude some of their compensation as a housing allowance, the woman cannot.

At Wisconsin Lutheran College

Amanda Retberg, who taught communications at Wisconsin Lutheran College, which is affiliated with the Wisconsin Evangelical Lutheran Synod contacted me about a particular instance of this anomaly.  She became troubled by the fact that men on the faculty at WLC were allowed to designate part of their compensation as a “housing allowance” excluding it from taxable income, but women were not.

She thought it might have to do with some extra ministerial duty that the men had, but there was none.  Like men, women faculty had to pass some theology classes.

The Rulings

Amanda did some research uncovering a technical advice memo- TAM 7512023010D – from 1975 that covered the denomination’s parochial school teachers

1. Male teachers of the *** Synod who have been “called” to teach in church schools qualify as duly ordained, commissioned or licensed ministers under section 1402(e)(1) of the Code as well as “ministers of the gospel” under section 107 of the Code.

2.It is not necessary to establish that a male teacher is performing ecclesiastical duties on a regular basis before he can qualify for the exclusion under section 107; however, he must be performing services which are ordinarily the duties of a minister of a gospel.

3. A male teacher does not have to perform all the sacerdotal functions to qualify for the exclusion; it is sufficient for him to be authorized by the congregation to perform the  functions. Since male teachers do not, by custom of the church, perform marriages, it is not necessary for the male teacher to perform marriages.  (Emphasis added)

Note the “male teachers”.  Also, note that the male teachers don’t have to do any minister stuff.  They just have to be able to, because they are, you know, men.

The Synod’s seventy-four-page tax manual notes

All called pastors, male staff ministers, male professors and male teachers of the WELS are considered

“Ministers of the Gospel” according to a private letter ruling from the IRS dated March 2, 1955. (Emphasis added)

I was not able to satisfy myself that I have found that ruling, but you can find those sort of sentiments in PLR 5505114020A

In this connection, it should be pointed out that it is our position that male teachers in parochial schools under the jurisdiction of the —————-Church are, in effect, duly ordained, commissioned, or licensed ministers of a church.  However, women parochial teachers in schools operated by —————Churches in the ————-are not in effect duly ordained, commissioned, or licensed ministers of a church

There is similar language in TAM 5505233260A.

Can’t Take It Anymore

Amanda eventually got fed up with the discrimination and resigned her post at WLC as she relates more fully in a guest post on Your Tax Matters Partner.

I found all of this deeply troubling and personally, could no longer support this inequality. Therefore, awhile back I made the decision to leave the college and denomination. So why write about it now?

Simple – to help draw attention to an issue that still hasn’t received the attention it deserves. Furthermore, this discrimination continues to this day and isn’t going away anytime soon. Men will continue to receive minister status, but similarly, situated women will not. This status allows men to take advantage of the accompanying ministerial housing allowance also known as a parsonage allowance.

But, But Religious Liberty

Reserving leading spiritual roles in churches to men is still pretty common.  The only instance I can think of where it is reserved for women is the Pussy Church of Modern Witchcraft (I’m not making that up), although I think it is likely there are a few more.  The free exercise clause of the First Amendment assures that Roman Catholic priests and Orthodox rabbis and the “ministers of the gospel” in many Protestant denominations can continue to all be men.

And the Seventh Circuit blessed 107(2). So does Wells Lutheran get a pass on sex discrimination?  Maybe.  But there is a big if. The defense of the constitutionality of 107(2) and the logic of the Seventh Circuit was based on the particularities of the work of parish ministry.  The pastor often taking people into his home and counseling them and the need to be on call and therefore live close to the church.  This creates an argument that 107(2) is a permissible technique to avoid entanglement.  That the job in question is reserved for men is immaterial.

When we get to college professors, though, the defense of 107(2) as anything other than a subsidy to religion breaks down. There is no suggestion that the housing requirements of men who get the minister of gospel status are any different from the women who do the same job but are denied it.

To give them credit Wells Lutheran College has done something to soften the discrimination.

I got a statement from Provost John Kollander:

Wisconsin Lutheran College (WLC) follows the established policies of our WisconsinEvangelical Lutheran Synod (WELS) church body and the tax laws of the United States. This dual compliance has a tax benefit for male called workers. WLC has chosen to provide a stipend to female called workers toward the goal of compensation equity among all WLC called workers.

Need For Reform

The stipend is a nice gesture and I applaud, but ironically it makes the case for 107(2) at least in this context being a straight up subsidy.  The college doesn’t have to pay the men as much, because of their religious status which has nothing to do with the work that they do.

I’m not that much of a constitutional purist, but 107(2) is really in need of an overhaul due to the abuse that is going on.  First off it needs a dollar ceiling like just about every other housing provision.  I’d go with $50,000 because I like round numbers and that is about what a two-star general gets in an expensive part of the country.

And if the rationale is the special requirements of parish ministry substitute “community spiritual leader” or something like that for “minister of the gospel”. Define “community spiritual leader” in terms of actual face to face activity in a defined geographic area.  That will cut out the televangelists, denominational leaders, professors, and basketball ministers and create parity among churches that have tighter or looser standards for who is a minister.