OPINION AND ORDER
The question in this ease is whether Congress may give a subset of religious employees an income tax exemption for which no one else qualifies. At issue is the constitutionality of 26 U.S.C. § 107(2), which excludes from the gross incomp of a “minister of the gospel” a “rental allowance paid to him as part of his compensation.” (Although the phrase “minister of the gospel” appears on its face to be limited to Christian ministers, the Internal Revenue Service has interpreted the phrase liberally to encompass certain religious leaders of other faiths as well. E.g., Silverman v. Commissioner,
Plaintiff Freedom from Religion Foundation, Inc. and some of its officers brought this lawsuit to challenge § 107(2) on the ground that it discriminates against secular employees and violates both the establishment clause of the First Amendment and the equal protection component of the Fifth Amendment. Plaintiffs initially challenged § 107(1), which excludes from a minister’s gross income “the rental value of a home furnished to [the minister] as part of his compensation,” but I dismissed that part of the lawsuit for'lack of standing. Dkt. # 15.
This is the second time that the. foundation and its officers have challenged § 107(2). In Freedom from Religion Foundation, Inc. v. Lew,
Now plaintiffs say that they followed the directions of the court of appeals to obtain standing and are challenging § 107(2) again. In a previous opinion in this case, the court allowed three ministers who receive housing allowances, along with the churches1 the ministers serve, to-intervene under Fed. R, Civ. P. 24 to present their own view regarding why they believe § 107(2) js valid. Dkt. # 35.
The case is now before the court on three motions: (1) Christopher Butler’s unopposed motion to intervene as a defendant, dkt. # 81; (2) a motion for summary judgment filed by the United States of America, the Commissioner of the Internal Revenue Service and the Secretary of the United States Department of Treasury, dkt. # 43; and (3) a motion for summary judgment filed by the intervenor defendants, dkt. #48. Plaintiffs have not.filed their own summary judgment motion, but instead ask the court in their opposition brief to enter judgment in their favor, on the court’s own motion. Dkt. # 65 at 41. See also Ellis v. DHL Exp. Inc. (USA),
The motion to intervene will be granted. Butler is the new pastor of intervenor defendant Chicago Embassy Church, replacing intervenor defendant Edward Peecher, who no longer works for that church. Like Peecher, Butler receives a housing allowance. Butler’s interests are identical to Peecher’s, Butler is adopting the summary judgment materials filed by intervenor defendants and he is not asking to make any changes to the case. In these circumstances, it is. appropriate to allow him to intervene. Intervenor' defendants have not moved to dismiss Peecher, presumably because he now works for a different church and will continue to receive a housing allowance and claim an exemption under § 107(2). Dkt. # 83, ¶ 5. ,
As to the merits, I will deny defendants’ motions for summary judgment and grant summary judgment -in plaintiffs’ favor. I adhere to my earlier conclusion in Lew that § 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.
Although defendants try to characterize § 107(2) as an effort by Congress to treat ministers fairly and avoid religious entanglement, the plain language of the statute, its legislative history and its operation in practice all demonstrate a preference for ministers over secular employees. Ministers receive a unique benefit under § 107(2); it is' not, as defendants suggest, part of a larger effort by Congress to provide assistance to employees with special housing needs. 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.
Under my view of the current law, that type of discriminatory treatment violates the establishment clause. This conclusion-makes it unnecessary to consider plaintiffs’ alternative argument that § 107(2) violates the equal protection component of the Fifth Amendment.
From the parties’ proposed findings of fact and the record, I find that the following fact's are undisputed.
UNDISPUTED FACTS
A.‘ Plaintiffs
Plaintiffs Annie Laurie Gaylor and Dan Barker are co-presidents of the Freedom from 'Religion Foundation, a nonprofit membership organization that advocates for the separation of church and state. Before her death in 2015, Anne Nicol Ga-yor was a lifetime member and president emerita of the foundation. (I will refer to Annie Laurie Gaylor simply as “Gaylor” and to Anne Nicol Gaylor by her full name.)
Gaylor and Barker each receive a salary from the foundation. Since 2011, the foundation has designated part of those salaries as a housing allowance; Anne Nicol Gaylor also received housing allowances before she died. The allowance for Gaylor and Barker was $4500 in 2011; $13,200 in 2012; and $15,000 in 2013. (Plaintiffs do not say what the allowance was in subsequent years, except that it is “intended to approximate their actual housing expenses for each year.” Pits.’ PFOF ¶ 8, dkt. # 63.)
Gaylor and Barker pay federal income taxes, as did Anne Nicol Gaylor until her death. In January 2015, Gaylor and Barker filed an amended income tax return for the year 2013. (Plaintiffs do not say so expressly, but presumably Gaylor and Barker filed a joint return because they are married.) In their amended return, Gaylor and Barker claimed the designated housing allowance as -an exclusion of income and they sought a partial refund of the taxes they paid. Anne Nicol- Gaylor also filed an amended return for the tax year 2013 in which she sought the same refund.
On March 2, 2015, the Internal Revenue Service allowed Gaylor’s and Barker’s requested- refund, but did not explain why. Dkt. # 60-2. On April 13, 2015, the IRS informed Anne Nicol Gaylor that it was processing her amended return, but it never issued a decision on her request for a refund.
In March 2015, Gaylor and Barker filed an amended return for the year 2012. They stated that they are.“not clergy” and that their “employer is- not a church,” but they believed “it- is - unfair that ministers can exclude housing while we cannot.” In July 2015, the IRS disallowed the claim. The letter stated that, “individual taxpayer[s] are allowed to. claim deductions for Housing on Sch A if they have mortgage interest and property taxes, otherwise there is no deduction.” Dkt. # 60-4. In a response to the IRS, Gaylor and Barker cited 26 U.S.C. § 107(2). In letters dated August 20, 2015, November 25, 2015 and January 12, 2016, the IRS informed Gaylor and Barker that the agency was “working on” their amended return. Dkt.'#60-5; Pits.’ PFOF ¶ 19, dkt. # 63.
In April 2016, plaintiffs filed this lawsuit. On June 27, 2016, plaintiff received the following response from the IRS:
My review of the information previously submitted by you indicates your claim should be denied. Your claim appears to be based on a portion of your wages being deemed to be a housing allowance. Your letter dated 07/14/2015 states that you are aware that a housing allowance is excludable from income if you are a minister of the gospel and also avows that neither of you are ministers of the gospel. It goes on to state that this is unfair and discriminatory. It appears that your concerns are misdirected. Congress writes tax laws and it is the job of the Internal Revenue Service to implement them. In other words, Congress set the rules and the IRS has to explain how those rules are applied in different situations. IRC Section 107 specifically requires that to exclude a housing allowance from income you must be a minister of the gospel. The IRS does not have the authority to interpret this to include anyone other than those who meet this definition.
Since receiving that response, plaintiffs Gaylor and Barker have filed amended returns for tax years 2014 and 2015 in which they seek a refund of taxes paid on their designated housing allowances. They intend to continue seeking the exemption for as long as they receive a housing allowance.
■ B. Intervenor Defendants
Intervenor defendant Patrick W. Malone is the rector of intervenor defendant Holy Cross Anglican Church in Waukesha, Wisconsin. He lives nine blocks from the church. The church pays Malone a housing allowance, which he excludes from his gross income when he files his taxes.'
Malone may be required to perform services related to his ministry at any time of the day or night. Many church meetings and social events take place in his home. He provides temporary lodging to church members and others connected to the church.
Intervenor defendant Gregory Joyce is the rector of St. Vladimir Orthodox Church, which gives Joyce a housing allowance. The church is in Chicago, Illinois and is part of intervenor defendant Diocese of Chicago and Mid-America of the Russian Orthodox Church Outside of Russia. The diocese requires its priests to live within their parish. Clergy may use their homes to provide temporary lodging for church members and others connected to the church. Some priests may conduct services in their own homes when a parish is new and does not yet have a church building. Joyce has an office in his home that he uses for church business; he counsels church members in his home and hosts parish events there, sometimes with little notice and at any hour of the day or night.
Intervenor defendant Christopher Sutler is the pastor of intervenor defendant Chicago Embassy Church, which pays Butler a housing allowance. The church is a member of the Illinois District Council of the Assemblies of God USA.
OPINION
A. Standing
One of the jurisdictional prerequisites to filing a lawsuit in federal court is “standing,” which means that the plaintiffs must suffer an “injury in fact” that is “fairly traceable” to defendants’ conduct and capable of being redressed by a favorable decision from the court. Lujan v. Defenders of Wildlife,
In light of the IRS’s denial, the government is satisfied that plaintiffs now, have standing to sue. Govt.’s Supp. Br., dkt. # 75 at 7. In particular, the government does not deny that the IRS’s rejection qualifies as an injury in fact; the injury is fairly traceable to § 107(2); and the injury could be redressed if plaintiffs prevail on their claim, either by granting them a refund or invalidating § 107(2). Heckler v. Mathews,
Despite the government’s position, two questions related to standing remain, one raised by the court and one raised by intervening defendants. First, as noted in an order dated June 19, 2017, dkt. #72, the IRS did not send Gaylor and Barker a rejection letter until after they filed this lawsuit. Because standing is part of subject matter jurisdiction and subject matter jurisdiction must be present when a plaintiff files the lawsuit in federal court, State Farm Life Insurance Co. v. Jonas,
A review of the summary judgment materials and supplemental briefs shows that both questions should be resolved in plaintiffs’ favor. First, in'response to'the court’s June 19 order, plaintiffs cite 26 U.S.C. § 6532(a)(1), which permits the filing of a federal lawsuit to challenge a decision denying a refund after “the Secretary renders a decision” or “the expiration of 6 months from the date of filing the claim.” In this case, plaintiffs waited more than a year before filing a federal lawsuit.
A party does not necessarily have standing to sue simply because a statute says she does. Sterk v. Redbox Automated Retail, LLC,
Although § 6532(a)(1) does not say so expressly, it is reasonable to construe the provision to mean that a claim is effectively denied if the IRS does not render a decision within six months. All parties agree on this point. Because denial of the claim is the injury that confers standing, I conclude that a claimant has standing to sue once the six months have passed without a decision from the IRS. Lew,
Second, as to the intervenor defendants’ argument that plaintiffs have not shown that future harm is likely, it is true that a party seeking prospective relief generally must show a “significant” or “substantial” risk that she will be harmed again in the future. Hummel v. St. Joseph County Board of Commissioners,
Intervenor defendants point out that the IRS actually granted Gaylor’s and Barker’s first request for a refund for the taxes they paid on their- housing allowance. The agency did not explain its decision, but if that had been the only agency action on the question, I 'would agree with interve-nor defendants that Gaylor and Barker do not -have standing to _ obtain prospective relief.
• The obvious flaw in intevenor defendants’ argument is- that the IRS denied Gaylor’s and Barker’s later refund request. Although the opposing rulings may raise some doubt about future decisions, absolute certainty is not required. In re C.P. Hall Co.,
For two reasons, the decision denying Gaylor’s and Barker’s request' for a refund is the more reliable indicator of the way that the IRS will handle future requests. First, it is the more recent decision. Second, it is' the only decision in' which the IRS explained its reasoning. In particular, the agency stated that the law “specifically requires that to exclude a housing allowance from income you must be a minister of the gospel. The IRS does not have the authority to interpret this to include .any-on¿ other than those who meet this definition.” Dkt. #60-6. Thus, the agency has stated its position that Gaylor and Barker are not entitled to the exemption because they' are ■ not “ministers of the gospel.” Because none of the parties have pointed to any changes in Gaylor’s and Barker’s behavior or status that would allow them to qualify for the exemption in the future, I see no reason why they would obtain a different result for future requests.
The intervenor defendants resist this conclusion on two grounds. First, they say that the court should not consider the IRS’s rejection letter because Gaylor and Barker did not receive it until after they filed this lawsuit; Second, they say that, even if the letter may be considered, it is not informative because it relies on Gay-lor’s arid Barker’s own “avow[al] that neither of [them] are ministers of the gospel” rather than an independent determination by the agency.
Neither argument is persuasive. As to the timing of,the letter, intervenor defendants rely on the principle noted above that jurisdiction is decided at the time the complaint is filed, but they are conflating issues. Although a plaintiff must have standing to sue at the time she files her lawsuit, intervenor defendants cite no authority for the view that all the evidence showing that standing existed for a particular form of relief must also exist at that time. As noted above, it was the IRS’s denial of the refund request that gave Gaylor and Barker standing to sue. It was not the rejection letter, which was simply evidence that the IRS would reject a similar request in the future.
With respect to the argument that the IRS’s letter is not a good indicator of the agency’s future rulings,’ it is true that the letter notes Gaylor’s and Barker’s “avowal” that they are not ministers of the gospel in the context of explaining the decision to deny a refund. However, regardless whether the IRS conducted its own inquiry into Gaylor’s and Barker’s qualifications for the exemption, the letter simply reflects what is obvious. As I noted in the earlier lawsuit, “there is no reasonable interpretation of the statute under which the phrase ‘minister of the gospel’ could be construed to include employees of an organization whose purpose is to keep religion out of the public square.” Freedom from Religion Foundation, v. Lew, 11-cv-626-bbc (W.D. Wis. Aug. 29, 2012), dkt. # 30 at 9. Even the government acknowledges in its reply brief that the refunds that Barker and Gaylor received for 2013 “were issued erroneously.” Dkt. # 67 at 2. Accordingly, I conclude that plaintiffs Gay-lor and Barker have standing to seek declaratory and injunctive relief.
Because Gaylor and Barker have standing, so does the foundation, under the doctrine of organizational standing. Sierra Club v. Franklin Cty. Power of Illinois, LLC,
The death of Anne Nicol Gaylor, complicates the claim of her estate,' but only slightly. The IRS never issued a decision on her request for a refund, which, as noted above, qualifies as a denial of her claim, so the estate has standing to seek a refund. Although Anne Nicol Gaylor’s death might moot a claim for prospective relief, that has little bearing on the case in light of my conclusion that'the bther plaintiffs may seek such relief. Ezell v. City of Chicago,
B. 2013 Decision
Because plaintiffs are raising the same challenge to § 107(2) that they raised in Freedom from Religion Foundation, Inc. v. Lew,
. In concluding that § 107(2) failed that test, I relied on Texas Monthly, Inc. v. Bullock,
The plurality concluded that the exemption did not have a secular purpose or effect and conveyed a message of religious endorsement because it provided a benefit to religious publications only, without a corresponding showing that the exemption was necessary to alleviate a significant burden on free exercise. Texas Monthly,
I concluded that § 107(2) was invalid under either the plurality or concurring opinion. The provision was invalid under the plurality opinion because it gave an exemption to religious persons without a corresponding benefit to similarly situated secular persons. As to the concurring opinion, “[bjecause a primary function of a ‘minister of the gospel’ is to disseminate a religious message, a tax exemption provided only to ministers results in preferential treatment for religious messages over secular ones.” Lew,
Even if Texas Monthly and these other cases were not dispositive, I concluded that both the purpose and effect of § 107(2) were to endorse religion, in violation of the establishment clause. Two pieces of legislative history supported that conclusion. A House of Representatives committee report issued before the law was passed in 1954 noted that “a minister of the gospel” who is “furnished a parsonage” as part of his compensation receives a tax exemption for the rental value of his home under what is now § 107(1). Lew,
Certainly, in these times when we are being threatened by a godless and anti-religious world movement we should correct this discrimination against certain ministers of the gospel who are carrying on such a courageous fight against this. Certainly this is not too much to do for these people who are caring for our spiritual welfare.
Id. (quoting' Hearings Before the H. Comm, on Ways & Means, 83rd Cong. 1, at 1574-75 (June 9, 1953) (statement of Peter F. Mack, Jr.)). I concluded that both the statement and the report showed that the purpose of § 107(2) was to assist a group of religious persons, which is not a secular purpose.
The various arguments raised by the government failed to show that § 107(2) had a secular purpose and effect: (1) § 107(2) was not needed to eliminate discrimination, either among religions or between religious and secular employers; (2) other statutes that granted a tax exemption for a housing allowance to' a small subset of secular employees were not instructive because each of those other statutes involved employees who bore special burdens not shared by the general population; (3) § 107(2) could not be justified as a mere “accommodation of religion” because the Supreme Court has held that the payment of a generally applicable tax does not qualify as a substantial burden on free exercise, Jimmy Swaggarb Ministries v. Board of Equalization of California,
Finally, I considered the question of entanglement and concluded that Texas Monthly was instructive because both the statute in that case and § 107(2) required the government to “evaluat[e] the relative merits of differing religious claims” and created “[t]he prospect of inconsistent treatment and government embroilment in controversies over religious doctrine.” Texas Monthly,
In closing, I noted that Congress was “free to rewrite the provision in accordance with the principles laid down in Texas Monthly and Walz so that it includes ministers as part of a larger group of beneficiaries.” Lew,
C. Defendants’ Arguments
Having reviewed the arguments raised by the government and the interve-nor defendants in their summary judgment motions, I adhere to the conclusion in Lew that § 107(2) violates the establishment clause. I considered and rejected most of defendants’ arguments in the previous case, so it is unnecessary to address those again. Instead, I will address defendants’ new and more developed arguments.
1. Secular purpose and effect
As discussed in Lew and acknowledged by all parties, a key question under the establishment clause is whether the statute at issue has a secular purpose or can be justified on secular grounds. Hernandez v. Commissioner of Internal Revenue,
a. Convenience of the employer doctrine
Some of defendants’ arguments regarding possible secular justifications for § 107(2) relate to the “convenience of the employer” doctrine, so I will provide an overview of that doctrine before addressing more specific issues. The basic premise is that certain benefits may be tax exempt if the benefit or the way-in which it is conferred serves the convenience óf the employer. Commissioner of Internal Revenue v. Kowalski,
In 1954, Congress codified the exemption in 26 U.S.C. § 119, which allows an employee to exclude from his gross income “the value of any ... lodging furnished to him, ... but only if ... the. employee is required to accept such lodging on the business premises of his employer as a condition of his ernployment.” Congress has never extended .§ 119 to include housing allowances. In 1976, Congress made housing expenses tax deductable if the home or a portion of it is, “exclusively used on a regular basis” for business purposes. 26 U.S.C. § 280A(c)(l).
Defendants devote a significant portion of their briefs to establishing the reasons why it is appropriate to grant ministers tax exemptions - under the convenience of the employer doctrine. These arguments are puzzling because neither this court nor plaintiffs have suggested that the doctrine is unavailable to ministers. It is undisputed that § 119 and § 280A(c)(l) are available to anyone who can meet the relevant requirements, including ministers and any other religious employee.
. The relevant question for this case is whether it was permissible for Congress to expand the convenience of the employer doctrine for ministers in a manner that eliminated any requirement to show that their choice of housing actually is for the convenience of the employer. This is because § 107(2) applies to all ministers who receive a housing allowance, regardless whether the minister’s home is ever used for church purposes or whether the minister’s choice of home is restricted by the church in any way.
By defendants’ own assertion, historically churches provided housing to ministers near or on church property because the minister was to be available at all times; the church wanted to control the minister’s living conditions so that they were consistent with church teachings; the church’s ownership of the home freed the minister to focus on the religious mission rather than home maintenance and made it easier for the church to settle new ministers. Govt’s PFOF ¶ 20, dkt. #44; Int. Dfts.’ PFOF ¶ 7, dkt. # 52. However, the government fails to explain how these considerations carry over to a situation involving a housing allowance, particularly when § Í07(2) includes no restrictions on the location, cost or use of a minister’s home.
Thus, the question is not whether ministers may deduct housing expenses from their gross income under the convenience of the employer doctrine; they undoubtedly can under either § 119 or § 280A. The question is whether the doctrine should apply to ministers even when the reasons for applying it are absent and even though the vast majority of other taxpayers are required to justify their request for an exemption.
Defendants offer four reasons as potential secular purposes for that special treatment: (1) providing for the “unique housing needs” of ministers; (2) eliminating discrimination among religions; (3) reducing entanglement between church and state; and (4) alleviating financial hardship on ministers, I will consider each in turn.
b. Unique housing needs
Both the government and the intervenor defendants argue that § 107(2) should not be viewed in “isolation,” but. instead should be considered as simply one;small part of a “broad” exemption, that employees , with “unique housing needs” receive. Dkt. # 47 at 17; Dkt. # 53 at 20; Dkt. # 68 at 1. For the reasons explained below, I conclude that the other exemptions defendants cite do not show that § 107(2) has a secular purpose or effect.
' It is clear that some of the exemptions do not provide any support for defendants’ argument. The government cites § 280A, but, as discussed above,' that provision is already available to ministers, so it provides no justification for a law that benefits only ministers and under much ’ broader circumstances.
Both the government and the intervenor defendants cite various provisions in § 119, some of which, like § 280A, could be invoked by any secular or religious employee. In any event, all of the provisions in § 119 relate to employer-provided housing rather than to housing allowances. Because § 107(1) (which relates to church-provided housing) is not at issue in this case, § 119 is not instructive.
. The intervenor defendants cite 26 U.S.C. § 162(a)(2), which allows a taxpayer to deduct “traveling expenses (including amounts expended for ... lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business” for up to one year. The language' of the provision makes it clear that it applies to business travel expenses while a taxpayer is away from home. It has nothing to do with a housing allowance for a primary residence. In any event, § 162 is not limited to particular professions, so ministers are free to claim the exemption if they qualify for it.
The remaining provisions are more similar to § 107(2), but still not helpful for defendants. Defendants rely on the same exemptions the government cited in Lew, 26 U.S.C. §§ 134, 911 and 912, which give a tax exemption for housing expenses to federal employees working overseas (§ 912), other Americans working overseas (§ 911) and members of the military (§ 134). For several reasons, I disagree with defendants that § 107(2) and these provisions are part of an “overall effort” or a “broad package of tax exemptions” for “persons whose occupations often require particular housing for job-related reasons.” Dkt. # 47 at 19; Dkt. # 53 at 21.
First, defendants suggest that Congress considered § 107(2) 'and these other laws together, but they cite no evidence for that. The only other law that appears in the legislative history cited by the parties is § 107(1). In fact, it appears that Congress enacted § 134 well after it enacted § 107(2), Pub. L. 99-514, Title XI, § 1168(a), Oct. 22, 1986, lOO Stat. 2512, so § 134 could not have influenced § 107(2).
Second, defendants cite no evidence that concerns related to the convenience of the employer doctrine had anything to do with the enactment of § 107(2). Rather, as discussed in Lew and will be discussed further below,- the only purposes disclosed in the legislative history are-a desire to extend the benefits in § 107(1) to all ministers and provide financial assistance to those “caring for our spiritual welfare” and “carrying on ... a courageous fight” against “a godless and anti-religious world movement.”
Third, the cited laws fail to provide any potential secular justification for § 107(2) because § 107(2) cannot be fairly grouped with those other exemptions. Defendants try to characterize §’ 107(2) and §§ 134, 911 and 912 as setting forth a general congressional policy for providing a categorical tax exemption to a particular group of employees who “often” have work-related restrictions on their housing, dkt. # 47 at 15, but that policy is not reflected in the law. There are many groups of professionals who “often” need to live near their work and be on call even when they are not working, such as certain types of healthcare providers, hotel managers, maintenance staff, funeral service directors and many others. However, none of those groups receive a categorical tax exemption for housing expenses as ministers do. Rather, if those employees wish to exclude housing expenses from their gross income, they must satisfy the requirements for the convenience of the employer doctrine set out in § 119 or § 280A. Defendants do not even attempt to explain why ministers may be singled out for favorable treatment while similarly situated groups are excluded.
In any event, §§ 134, 911 and 912 bear no relationship to § 107(2). Those statutes do not reflect a general policy regarding employees who “often” have job-related housing requirements. Rather, they are ad hoc determinations by Congress regarding a limited number of employees in specific circumstances. Sections 912 and 134 both relate to federal employees, so the housing tax exemption they receive may be viewed simply- as a benefit provided by the employer. The federal government has wide discretion in structuring the way in which it compensates its own employees, .so no general policy regarding either .religious or secular private employees may be inferred from those statutes. Although private citizens may invoke § 911, this includes ministers, if they are working overseas.
As I noted in Lew, it is particularly inappropriate to draw an inference of a general policy from benefits received by members of the military under § 134, who are sui generis as to “the level of service they give to the government and the sacrifices they make.” Lew,
Further, all three of the statutes relate to employees whose housing is necessarily affected by their jobs. People who work overseas obviously are required to move for their employer and incur expenses associated with that move. As for service members, intervenor defendants acknowledge that their duties “require [their] physical presence at [their] post or station; [their] service is continuous day and night; [and their] movements are governed by orders and commands.” Dkt. # 53, at 25 (quoting Jones v. United States, 60 Ct. CL 552, 569 (1925)).
Some ministers may be in a similar situation, ' including some of the intervenor defendants, but by no means are all ministers so restricted, as is demonstrated by defendants’ own expert, religious historian James Hudnut-Beumler. He notes that parsonages were once ubiquitous for churches but became less common as “religious diversity ... and residential mobility increased.” Hudnut-Beumler Dec. 187, dkt. # 57. (In fact, one commentator- observes that 87 percent of ministers now receive cash allowances for housing. Cho-dorow, dkt. # 61-2, at 149.) In describing modern trends, the historian stated that a minister’s decision to .live in a parsonage may be driven by factors such as the state of the housing market in a particular community and the convenience of the minister, -rather than the needs of the church. Id. at ¶ 104 (at time § 107(2) was enacted, more ministers lived in housing of their own choice because “it was easier [than in previous decades] for them to get a mortgage for a home of their own and easier to sell quickly if called to a new congregation”); id. at ¶ 126- (trend is for churches to have parsonages “in those areas that are expensive”); id. at 1133 (housing allowance gives minister flexibility for “accommodating family size, school district, special needs, disability access”). In fact, despite a lengthy discussion in their proposed findings of fact about past and present housing trends for ministers, defendants include no facts showing that ministers who receive a housing allowance generally are (1) restricted by their churches regarding where they can live or what kind of home they can buy; or (2) required to use their home for church purposes. Thus, over time it appears that the factors influencing housing choices of ministers have begun to more closely resemble the factors considered by the general public. Even as to the intervenor defendants themselves, only Gregory Joyce stated that his church restricted the location of his housing.
Further, § 107(2) has been applied to employees who bear little resemblance to. the intervenor defendants with respect to their duties. One commentator has noted that the IRS has granted the exemption to a rabbi working as a. teacher, ministers working as guidance counselors or basketball coaches and every member of the Churches of Christ teaching at a Christian college. Chodorow, dkt. # 61-2, at 114 and n. 48 (citing I.R.S. P.L.R. 1991-26-048 (Apr. 2, 1991); I.R.S. P.L.R. 2000-02-040 (Jan. 14, 2000); I.R.S. Rev. Rui. 70-549; and Jobe v. Commissioner, No. 33686-83). This shows that “ministers receive tax benefits'unavailable to non-ministers performing the exact same jobs.” Id.
In sum,'the case is weak for the argument that ministers should receive ■& blanket exemption on the ground that they have unique housing needs. Even if it is true that ministers Often meet the requirements for the convenience of the employer doctrine, the same could be said of other employees not covered by § 107(2) or a comparable exemption. In those other situations, the employee must actually show that she is living in housing for the convenience of the employer. I see no secular justification for eliminating as to one group of religious employees the requirement in the convenience of the employer doctrine that the employee’s housing actually serves the convenience of the employer^
c. Eliminating denominational discrimination
Defendants’ argument on this issue is a more developed version of the government’s argument in Lew. The argument has. two components. First, defendants say that Congress enacted § 213(b)(ll) of the Revenue Act of 1921 (which later became § 107(1) in 1954), giving a tax exemption to ministers who live in church-provided parsonages, because the Department of Treasury was refusing to grant exemptions to ministers under the convenience of the employer doctrine. (Plaintiffs deny that the department was discriminating against ministers, but I need not resolve that dispute to decide this case.) Second, in 1954, Congress enacted § 107(2)' to eliminate discrimination between ministers who lived in parsonages and' ministers who received a housing allowance. H.R. Rep. No. 1337, at 15, available in U.S. Code Congressional and Administrative News, 83rd' Congress, Second Session, at 4040 (1954) (purpose of § 107(2) is to “remove[ ]” or “correct” the “discrimination” in existing law between ministers who live in parsonages and those who receive housing allowance).
Viewed from a distance, defendants’ argument has surface appeal, as both steps in the process appear to be straightforward attempts to make the law more equitable. However, a closer look reveals that the enactment of § 107(1) provides no justification for § 107(2).
As to the first step, it is apparent from the language of § 107(1) that it goes beyond simply codifying the convenience of the employer doctrine for ministers. Section 107(1) is missing the requirements in § 119 that the lodging is located “on the business premises of his employer” and offered “as a condition of his employment.” Thus, the exemption in § 107(1) for ministers is broader than what most other employees receive. It seems counterintuitive to argue that, because Congress enacted one broad exemption that' favored ministers in § 107(1), it was justified in enacting § 107(2), which is an even more expansive exemption that provided an even greater benefit to ministers arid made the disparity between ministers and secular employees that much wider.’
As in Lew, § 107(1) is not at issue in this case. Accordingly, I do not consider whether § 107(1) violates the establishment clause and I will assume that defendants are correct in asserting that the purpose of § 107(1) was simply to insure that ministers received an exemption that secular employees already had. Making that assumption, however, does not help defendants justify § 107(2).
Defendants say that, § 107(2) was about insuring equal treatment among all religions rather than eliminating discrimination between ministers and secular employees; but that rationale has multiple problems. First, defendants cite no authority for the view that the government may eliminate a perceived disparity among religions by mating (or exacerbating) a disparity between religious persons and secular persons. If Congress believed that it was unfair to treat employees with housing allowances differently from employees who live on employer-owned property, it could have enacted a statute that allowed all similarly situated employees, both secular and religious alike, to exclude a housing allowance from their gross income rather than targeting “ministers of the gospel” alone for more favorable treatment.
Second, as I noted in Lew,
“Under defendants’ view, if one religious person received a tax exemption, then Congress would be compelled to give every religious person the same exemption, even if the exemption had nothing to do with religion.” Lew,
Intervenor defendants argue that Congress was required to enact § 107(2), citing Larson v. Valente,
. Intevenor defendants also cite no cases in which a court relied on Larson to either justify a statute that showed favoritism toward religious persons or invalidate a statute that required religious persons to meet the same requirements as everyone else to obtain a government benefit. Rather, the Court has cited Larson almost exclusively for the proposition that “one religious denomination cannot be officially preferred over another.” E.g., Grumet,
More instructive is Hernandez,
Even if I were to assume that § 107(1) discriminates against less established or wealthy churches in the sense discussed in Larson, § 107(2) was not an appropriate response to that discrimination, for two reasons. First, § 107(2) goes much further than any concern about churches who could not afford to purchase a parsonage. If that were the only concern, Congress could have created an exemption for rental housing that is provided by the church or is subject to restrictions imposed by the church. By divorcing the exemption from any connection to the convenience of the employer doctrine, Congress revealed that its true purpose was to demonstrate a religious preference. In fact, the benefit ministers receive under § 107(2) is potentially greater than that received under § 107(1) because a minister can use his housing allowance to purchase a home that will appreciate in value and he can deduct any interest he pays on his mortgage and property taxes. 26 U.S.C. § 265(a)(6); Erwin Chemerinsky, The Parsonage Exemption Violates the Establishment Clause and Should Be Declared Unconstitutional, 24 Whittier L. Rev. 707, 723 (2003).
Second, as I noted in Lew,
In short, it is simply inaccurate to say either that § 107(1) discriminates against particular religious denominations or that § 107(2) corrects any discrimination in § 107(1). Rather, Congress’ statement that it was “unfair” to make ministers pay taxes on a housing allowance is simply an admission that.it wanted to provide aid to a group of religious persons. That purpose is confirmed by the sponsor’s statement that § 107(2) was needed to “fight against” a “godless and anti-religious world movement.” Because that is not a secular purpose, it cannot justify § 107(2) under the establishment clause.
d. Entanglement
In addition to secular purpose and effect, courts deciding a claim under -the establishment clause sometimes consider whether a statute fosters “excessive entanglement” between government and religion. E.g., Agostini v. Felton,
Defendants now make'the opposite argument: § 107(2) does not foster excessive entanglement; it avóids the entanglement that would be fostered if ministers would be required to comply with the requirements for the convenience of the employer doctrine that apply to most secular employees. Defendants say that the alleged administrative advantages of § 107(2) are themselves a secular justification for the law. •
Defendants have not made a persuasive argument on this point. To begin with, defendants cite no evidence that concerns about entanglement had anything to do with § 107(2) and they cite no authority for the view that concerns about entanglement can justify preferential treatment for religious persons. Also, much of intervenor defendants’ argument relates to alleged difficulties with applying § 119 to ministers. As noted above, § 119 applies to employees who are required to live in employer-provided housing. Because the provision that applies to ministers who live in employer-provided housing, § 107(1), is not at issue in this case, § 119 is not relevant.
Other than §§ 134, 911 and 912 (all of which are discussed above), the parties identify no federal statutes that allow secular employees to exclude a housing allowance from their gross income. The government suggests that the closest analogue to § 107(2) for most employees is 26 U.S.C. § 280A(c)(l), which allows any employee (secular or religious) to deduct her housing expenses from her gross income if -the home or a portion of it is “exclusively used on á regular basis” for business purposes.
Although the government argues generally that § 280A involves “intrusive inquiries,” dkt. # 47 at 2, it fails to explain how those inquiries are any more intrusive for ministers than they are for any secular employee who wants the exemption. Equally important, defendants make con-clusory allegations that applying § 280A to ministers would require the government to answer difficult religious questions and interfere with a minister’s exercise of religion, but fail to develop the argument or provide likely scenarios in which that would occur. Cf. Illinois Bible Colleges Association v. Anderson,
Even if it is assumed.that it would be difficult to apply § 280A to ministers, it does not. follow that the solution is to give them preferential treatment. Section 280A did not even exist when Congress enacted § 107(2), so it should not be viewed as the only alternative. If Congress is concerned about entanglement issues surrounding § 280A, it could enact a law that liberalized the exemption for everyone or for a class (such as nonprofit organizations) that is “broad [enough] that it can be fairly concluded that religious [persons] could be thought to fall within the natural perimeter.” Texas Monthly,
e. Hardship on ministers
Intervernor defendants say that “[imposing additional taxes on ministers’ housing allowances- would interfere with the ability of churches to carry out their religious missions by diverting scarce resources away from their core First Amendment activities.” Dkt. #53 at 15. They cite evidence regarding the potential financial effects that invalidating § 107(2) would have on them and they argue that the statute is a'permissible accommodation of the free exercise of religion.
It is likely that when § 107(2) was enacted, some members of Congress shared intervenor defendants’ concerns about financial hardship on ministers. Plaintiffs cite a statement from the law’s sponsor, who observed that “many ... clergymen support families like the rest of us” and “must pay 1953 rents for a dwelling house,” but “receive low income based on the 1940 cost of living.” Hearings Before the H. Comm, on Ways & Means, 83rd Cong. 1, at .1576 (June 9, 1953) (statement of Peter F. Mack, Jr.).
I do not doubt that many ministers are paid significantly less- than what their commitment and skill level would suggest. This is an unfortunate truth that applies to many devoted and talented employees in service professions, both religious and secular. However, the manner in which Congress alleviated a financial burden on a group of religious persons was neither required by the free exercise clause nor permitted by the establishment clause under the facts of this case.
As an initial matter, § 107(2) is not limited to ministers with a relatively low income. In 2002, in the midst of a controversial case of a minister who. .sought a $100,000 exemption under § 107(2), Congress limited the amount of the exemption to the fair rental value of a home. Warren v. Commissioner of Internal Revenue,
As long ago as 1984, the Department of the Treasury acknowledged that one result of § 107(2) is to give “a disproportionately greater benefit to relatively affluent ministers, due 'to the higher marginal tax rates applicable to their incomes.” U.S. Dept, of Treasury, Tax Reform for Fairness, Simplicity, and Economic Growth: The Department Report to the President, vol. II 49 (1984). Thus, an .evangelist with a multimillion dollar home is entitled under § 107(2) to deduct the entire rental value of that home, even if it is not used for church purposes. E.g„ Chodorow, dkt. # 61-2, at 116 n.4 (“Joel Osteen lives in a $10.5 million home and is entitled to exclude the fair rental value of that home so long as he spends that money on the home and his church allocates that amount to housing.”). If Congress were concerned about lessening the tax burden on poor Americans, it could have tied the exemption to income and made it generally available to any employee who qualified rather than to all ministers who receive a housing allowance. Nyquist,
In any event, as I noted in Lew, the mere payment of a generally applicable tax does not qualify as a substantial burden on free exercise. Jimmy Swaggart Ministries,
2. Exemption versus subsidy
. Defendants repeat an argument the government made in Lew, which is that tax exemptions do not raise the same concerns under the establishment clause that tax subsidies do. The parties cite dueling Supreme Court decisions on the question whether subsidies and exemptions are simply two sides of the same coin. Compare, e.g., Regan v. Taxation with Representation of Washington,
Although these cases may suggest that the Supreme Court does not always see exemptions and subsidies as identical, exemptions do not simply get a “pass” under the establishment clause, as Texas Monthly made clear. As I noted in Lew, 983 F.Supp;2d at 1065, if one were to take defendants’ argument to its logical conclusion, it would permit the government to eliminate all taxes for religious organizations and individuals without any secular purpose for doing so, an extreme position that defendants do not advance.
Intervenor defendants identify the appropriate standard for evaluating a religious exemption: whether the exemption “alleviate[s] significant governmental interference with the ability of religious organizations to define and carry out their religious missions.” Dkt. # 53 at 14 (quoting Corp. of Presiding Bishop of Church of Jesus Christ of Latterday Saints v. Amos,
Although intervenor defendants invoke the standard cited- above for permissible religious accommodations, they fail to apply that standard to their own situation. Of course, invalidating § 107(2) could divert some of a minister’s resources from endeavors that could further a church’s mission, but the same would be true of any tax, just as taxes on secular employees divert their resources from other endeavors that are important to them. As noted above, the Supreme Court has held that generally applicable taxes do not impose a constitutionally significant burden on a taxpayer’s rights under the free exercise clause. Jimmy Swaggart Ministries,
3. History of religious tax exemptions
Intervenor defendants cite cases such as Town of Greece, New York v. Galloway, — U.S. — ,
Intervenor defendants’ reliance on cases such as Town of Greece is unavailing be-pause the history cited by intervenor defendants (which comes mostly from discussions in Walz,
Congress enacted § 107(2) in 1954, so it is" not brand new. However, the question the Court asked in Town of Greece (as well as in Marsh v. Chambers,
4. Effect on other statutes
Finally, intervenor defendants say that invalidating § 107(2) will “endanger scores of tax provisions throughout federal and state law.” Dkt. #53 at 48. Despite that broad statement, intervenor defendants discuss only one-' provision, 26 U.S.C. § 1402(e), which grants an exemption for the self-employment tax to certain ministers who are “conscientiously opposed to, or because of religious principles ... opposed to, the acceptance ... of any public insurance.”
Neither § 1402 nor any religious exemption other than § 107(2) is before the court, so I do not decide whether any of those other provisions violate the establishment clause. However, § 1402(e) is readily distinguishable from § 107(2) on two grounds, as I noted iñ Lew,
Second, as is also clear from the face of § 1402(e), the exemption applies not simply to ministers who object to paying the self-employment tax but to receiving public insurance. Because it is unlikely that a minister claiming an - exemption under § 1402(e) will receive the benefits the tax is designed to fund, the exemption may ultimately provide no net benefit to the minister. It is for these reasons that courts have upheld §• 1402 against establishment clause challenges. Droz v. Commissioner of Internal Revenue,
D. Conclusion
Having considered all of the arguments advanced by defendants, I am not persuaded either that it was an error to conclude in Lew that § 107(2) is unconstitutional or that any new facts or law support a differ-, ent conclusion. Defendants’ stated concerns about treating religions equally and avoiding, entanglement do not find any support in the facts or the law. Thus, any reasonable observer would conclude that the purpose and effect of § 107(2) is to provide financial assistance to one group of religious employees without any consideration , to the secular employees who are similarly situated to ministers. Under current law, that type -of provision violates the establishment clause.
In reaching this conclusion, I do not mean to imply that any particular minister is undeserving of the exemption or does not have a financial need for one. 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.
As I have discussed throughout this opinion, Congress could have enacted a number of alternative exemptions without running afoul of the First Amendment. For example, Congress could have accomplished a similar goal by allowing any of the following groups to exclude housing expenses from their, gross income: (1) all taxpayers; (2) taxpayers with incomes less than a specified amount; (3) taxpayers who live in rental housing provided by the employer; (4) taxpayers whose employers impose housing-related requirements on them, such as living near the workplace, being on call or using the home for work-related purposes; or (5) taxpayers who work for nonprofit organizations, including churches. Or some of these categories could be combined. One commentator has suggested that § 107 be amended to apply to taxpayers who work for tax exempt organizations under § 501(c)(3) and are on call at all times, Ellen P. Aprill, Parsonage and Tax Policy: Rethinking the Exclusion, 96 Tax Notes 1243 (Aug. 26, 2002).
Of course, these suggestions are not exhaustive. Congress retains wide discretion in adopting tax laws that further its legitimate policies. What Congress may not do is single- out religious persons for preferential treatment without a secular basis for doing so, as it has done in § 107(2).
E. Remedy
In Lew, both the parties and the court assumed that the only available relief was declaring § 107(2) unconstitutional and enjoining its enforcement. That remains part of plaintiffs’ request for relief, but now plaintiffs have raised the possibility of other types of relief as well.
First, now that the IRS has denied Gay-lor’s and Barker’s request for a refund, plaintiffs suggest that they may be entitled to a refund and an injunction requiring the IRS to “extend benefits under the statute to those excluded.” Dkt. # 65 at 10. (Inter-venor defendants question plaintiffs’ right to obtain a refund because that request was not included in their complaint, but that argument is inconsistent with circuit law. Heitmann v. City of Chicago, Illinois,
It seems unlikely that it would be appropriate for the court to issue an injunction directing the IRS to extend the scope of the exemption because, as noted above, there are multiple ways that the statute could be rewritten, a task generally left for Congress. Virginia v. American Booksellers Association, Inc.,
Despite my skepticism on these issues, I am reluctant to make a" definitive determination regarding the appropriate remedy because none of the parties developed an argument in favor of á refund, a particular injunction or both or otherwise developed an argument regarding what the court should do in the event that it concludes that § 107(2). is unconstitutional. Accordingly, I will issue declaratory relief and give the parties an opportunity to file supplemental materials regarding what additional remedies are appropriate, if any. In addition, the parties should address the question whether relief should be stayed pending a potential appeal.
ORDER
IT IS ORDERED that
1. Christopher Butler’s motion to intervene, dkt. # 81, is GRANTED.
2. The motions for summary judgment filed by defendants Jacob Lew (now Steve Mnuchin), John Koskinen and the United States of America, dkt. # 43, and interve-nor defendants Bishop Edward Peecher, Chicago Embassy Church,- Father Patrick Malone, Holy Cross Anglican Church,, the Diocese of Chicago and Mid-America of the Russian Orthodox Church Outside of Russia and Christopher Butler, dkt, # 48, are DENIED. ,
3. On the court’s own motion, summary judgment is GRANTED to plaintiffs Freedom from Religion Foundation, Annie Laurie Gaylor, Dan Barker and Ian Gaylor as the personal representative of the estate of Anne Nicol Gaylor.
4. It is DECLARED that 26 U.S.C. § 107(2) violates the establishment clause of the First Amendment to the United States Constitution.
5. The parties may have until October 30, 2017, to file supplemental briefs on the questions whether any additional remedies are appropriate and whether relief should be stayed pending a potential appeal. Response briefs are due November 8, 2017. There will be no reply. If the parties do not respond by the deadline, I will direct the clerk of court to enter judgment without awarding any additional relief.
6. All relief is STAYED pending entry of judgment.