### In the 

# United States Court of Appeals For the Seventh Circuit

____________________ Nos. 18-1277 & 18-1280
A NNIE L AURIE G AYLOR, et al. , Plaintiffs-Appellees
,

v.

S TEVEN T. M NUCHIN , et al., Defendants-Appellants,

and E DWARD P EECHER , et al. , Intervening Defendants-Appellants

.

____________________ Appeals from the United States District Court for the Western District of Wisconsin. No. 16-cv-215 — Barbara B. Crabb
, Judge

.

____________________

A RGUED O CTOBER 24, 2018

— D ECIDED M ARCH 15, 2019

____________________

Before B AUER , M ANION , and B RENNAN , Circuit Judges

. B RENNAN , Circuit Judge . Since the Founders crafted the Religion Clauses of the First Amendment, courts have grappled2 Nos. 18-1277 & 18-1280

with the “play in the joints” between them. Walz v. Tax Comm. of City of N.Y. , 397 U.S. 664, 669 (1970). This case calls us to do so once more. Freedom From Religion Foundation (“FFRF”) claims that a longstanding ta x code exemption for religioushousing, 26 U.S.C. § 107(2) of the Internal Revenue Code, violates the Establishment Clause . The district court agreed. The U.S. Treasury Department and several intervening religious organizations ask us to re instate the exemption, asserting that the survival of many congregations hangs in thebalance. We must decide whether excluding housing allowances from ministers’ taxable in come is a law “respecting anestablishment of religion” in violation of the First Amendment.

I.

A. History of § 107(2)

The facts before us are not in dispute. The Sixteenth Amendment was rati fi ed in 1913, authorizing Congress to levy an income tax. Congress imposed a federal income tax that same year and has levied on e in various forms since. As a result, Congress and the Treasury Department needed to de fi ne taxable “income.” A rule de fi ning income that survives today in the Internal Revenue Code is the “convenience-ofthe-employer” doctrine. Under that doctrine, housing provided to employees for the conv enience of their employer is exempt from taxable income. Early examples of exclusions under the doctrine include housing provided to sailors living aboard ships, workers living in camps, and hospital employees. But the convenience-of-the-employer doctrine was notNos. 18-1277 & 18-1280 3

made available to ministers. 1 In 1921, the Treasury Department announced ministers would be taxed on the fair rental value of parsonages provided as living quarters. O.D. 862, 4 C.B. 85 (1921). Congress reacted quickly and enacted a statute to excludechurch-provided parsonages from the taxable income of ministers. The Treasury Department interpreted this statute to apply only to housing provided in-kind; cash housing allowances were included in income. I.T. 1694, C.B. II-1, at 79 (1923). This continued for decades unt il in the 1950s several ministers successfully challenged the limitation to in-kind housing. 2 Congress then enacted 26 U.S.C. § 107, which provides:In the case of a minister of the gospel, gross income does not include— (1) the rental value of a home furnished to him as part of his compensation; or (2) the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home ...

1 The text of the tax code refers specifically to “ministers of the gospel,” so we use that term. Courts have long held the provision applies to religious leaders of any denomination, regardless of formal title. See, e.g. , Salkov v. Comm’r , 46 T.C. 190, 194 (1966) (holding a Jewish cantor was a “minister of the gospel”).

2 See, e.g. , Williamson v. Comm’r , 224 F.2d 377 (8th Cir. 1955); Conning v. Busey , 127 F. Supp. 958 (S.D. Ohio 1954); MacColl v. United States
, 91 F. Supp. 721 (N.D. Ill. 1950).4 Nos. 18-1277 & 18-1280

Section 107(1) reauthorized the in-kind parsonage exemption in place since the 1920s. Section 107(2) authorized the IRS to also exempt cash allowances from ministers’ taxable income. 3

B. District Court Proceedings

FFRF describes itself as a “nonprophet nonpro fi t” organization that “[t]akes legal action challenging entanglement ofreligion and government, government endorsement or promotion of religion.” What Does the Foundation Do? , F REEDOM F ROM R ELIGION F OUNDATION , h tt ps:// ff rf.org/faq/item/15001- what-does-the-foundation-do (last visited March 10, 2019). Seeking to challenge both § 107( 1) and § 107(2), FFRF paid its co-presidents Annie Gaylor and Dan Barker a portion of their salaries in the form of a housing allowance. FFRF also paidthis housing allowance to a former president of the organization, Anne Nicol Gaylor (“Nicol Gaylor”). 4 FFRF, Gaylor, Barker, and Nicol Gaylor, none of whom meet the IRS’s de fi

nition of “minister,” then su ed the Treasury Department,claiming § 107 violates the First Amendment because it conditions a tax bene fi t on religious a ffi liation. We dismissed this challenge for lack of standing because FFRF and its employees never applied for § 107(1) or § 107(2) exemptions, so they were

3 An amicus brief from the Universi ty of St. Thomas School of Law (Minnesota) estimates that of the Un ited States’ 384,000 congregations, 200,000 to 300,000 provide a housing allowance to their ministers under 26 U.S.C. § 107(2).

4 Nicol Gaylor, Annie Gaylor’s mother and co-founder of FFRF, passed away during the initial lawsuit filed by FFRF. Although the party to this lawsuit is technically the Esta te of Anne Nicol Gaylor, we refer to her as “Nicol Gaylor” for brevity.Nos. 18-1277 & 18-1280 5

never denied them. Freedom From Religion Foundation, Inc. v. Lew , 773 F.3d 815, 825 (7th Cir. 2014) (“ Lew ”). In response, Gaylor and Barker fi led amended tax returnsfor 2012 and 2013 claiming refunds for their housing allowances under § 107(2); Nicol Gaylor did the same for 2013. The IRS erroneously issued refunds to Gaylor and Barker for 2013 but made no decisions on plainti ff s’ other claims. After more than six months without IRS action on plainti ff s’ claims, FFRF and its employees brought this suit. The IRS then denied the 2012 refund claims because none of the claimants were ministers. The Treasury Department moved to dismiss FFRF’s § 107(1) challenge for lack of subject ma tt er jurisdiction. The district court granted the moti on for the same reasons we articulated in Lew : FFRF’s employees never claimed a § 107(1)exemption. FFRF does not appeal that ruling. Later, the district court permi tt ed several pastors who receive housing allowances and their associated religious organizations to intervene to defend § 107(2). 5 The Treasury Department and intervenors moved for summary judgment. The district court denied their motions and instead granted summary ju dgment to FFRF and its employees. The court held that FFRF and its employees had standing to challenge § 107(2), an d that that statute violates the Establishment Clause of the First Amendment. Gaylor v.

5 The intervening defendants are Bishop Edward Peecher, the Chicago Embassy Church, Father Patrick Malone, the Holy Cross Church, the Diocese of Chicago and Mid-America of the Russian Orthodox Church Outside of Russia, and Pastor Christop her Butler. Each of the intervenors receive or provide housing allowances under § 107(2).6 Nos. 18-1277 & 18-1280

Mnuchin , 278 F. Supp. 3d 1081, 1104 (W.D. Wis. 2017). The court held that § 107(2) violated the secular purpose prong of the test set forth in Lemon v. Kur tz man , 403 U.S. 602 (1971), and ruled that the statute’s true purpose was to “provide aid to a group of religious persons.” Gaylor , 278 F. Supp. 3d at 1099. The court rejected the argument that § 107(2) avoids excessive government entanglement with religion, because in the court’s view “concerns about entanglement [do not] justify preferential treatment for religious persons.” Id. The Treasury Department and the intervenors appeal.

II. Neither the Treasury Department nor the intervenors dispute the district court’s ru ling that FFRF has standing to challenge § 107(2). Nevertheless, even if the issue has not beenraised, if there is no Article III standing our court must dismiss the suit. Diedrich v. Ocwen Loan Servicing, LLC , 839 F.3d 583, 588 (7th Cir. 2016). We evaluate standing to determine whether FFRF resolved the de fi ciencies we noted in Lew

. To establish Article III standing, plainti ff s must show they have su ff ered “(1) a concrete and particularized ‘injury in fact’ (2) that is fairly traceable to the challenged action of the defendant, and that is (3) likely to be redressed by a favorable judicial decision.” Lew , 773 F.3d at 819 (citing Lujan v. Defenders of Wildlife , 504 U.S. 555, 560–61 (199 2)). To challenge the constitutionality of a tax provision, a plainti ff must have “personally claimed and been denied the exemption.” Lew , 773 F.3d at 821. An essential element of “injury in fact” is that the injury be “actual and imminent, not co njectural or hypothetical.”Nos. 18-1277 & 18-1280 7

Lujan , 504 U.S. at 561 (internal quot ations and citations omitted). When FFRF fi led this action, Gaylor and Barker had yet to be denied a refund from their 2012 tax returns, and Nicol Gaylor had still, by the time of the district court’s decision, received no answer to her 2013 refund request. Yet this does not necessarily mean FFRF lack ed standing. Under 26 U.S.C. § 6532(a)(1), an income tax refund suit may be fi led no earlier than six months after the refund claim was submi tt ed. A statute cannot “‘lower the threshol d for standing below the minimum requirements imposed by the Constitution,’ but Congress does have the power to ‘enact statutes creating legal rights, the invasion of which creates standing, even though no injury would exist without the statute.’” Sterk v. Redbox Automated Retail, LLC, 770 F.3d 618, 623 (7th Cir. 2014) (quoting Kyles v. J.K. Guardian Sec. Servs., Inc. , 222 F.3d 289, 294 (7th Cir. 2000)). The district court concluded it was reasonable to interpret § 6532(a)(1) as rendering a claim “e ff ectively denied if the IRS does not render a decision within six months.” Gaylor, 278F. Supp. 3d at 1087. We agree. As the district court noted, preventing a claimant from fi ling a refund suit until the IRS responded to the claim “would allow the IRS to deprive a party of standing inde fi nitely by withholding a decision.” Id. at 1088. Several courts of appeals have cited the six-month fi ling requirement approvingly. See, e.g. , Fletcher v. United States
, 452 Fed. App’x 547, 552 (5th Cir. 2011) (“[B]efore a taxpayer can bring a refund suit, he or sh e must ... wait until either the IRS denies the claim or six months have expired since fi ling the administrative claim.”); Dumont v. United States , 345 Fed. App’x 586, 590 (Fed. Cir. 2009) (“ [A] suit ... cannot be instituted until either the IRS denies the claim or six months pass without its taking action.”); Sorenson v. Sec ʹ y of Treasury of8 Nos. 18-1277 & 18-1280

U.S ., 752 F.2d 1433, 1438 (9th Cir. 1985), a ffʹ d , 475 U.S. 851(1986) (“The former section prohibits the courts from entertaining any refund suit fi led before the expiration of six months from the date the claim for refund is fi led ... .”); see also Lew , 773 F.3d at 821 n.3 (“The plainti ff s could have ... paid income tax on their housing allowance, claimed refunds from the IRS, and then sued if the IRS rejected or failed to act upon their claims.”) (emphasis added). Gaylor, Barker, and Nicol Gaylor have properly alleged a “concrete, dollars-and-cents injury.” Lew , 773 F.3d at 821. “[T]hey have incurred a cost or been denied a bene fi t on account of their religion [or lack thereof],” Arizona Christian Sch. Tuition Org. v. Winn , 536 U.S. 125, 130 (2011), which confers Article III standing. Becaus e its members have standingand the contested issue is germane to its organizational purpose, FFRF has organizational standing to sue as well. See Sierra Club v. United States E.P.A. , 774 F.3d 383, 388–89 (7th Cir. 2014) (“‘An organization has stan ding to sue if (1) at least one of its members would othe rwise have standing; (2) theinterests at stake in the litigation are germane to the organization’s purpose; and (3) neither the claim asserted nor the relief requested requires an individu al member’s participation in the lawsuit.’”) (quoting Sierra Club v. Franklin Cty. Power of Ill. LLC , 546 F.3d 918, 924 (7th Cir. 2008)).

III.

This case comes to us after a grant of summary judgment, so we assess the parties’ claims de novo. Freedom from Religion Found., Inc. v. Concord Cmty. Sch. , 885 F.3d 1038, 1045 (7th Cir. 2018) (“ Concord”)

.Nos. 18-1277 & 18-1280 9

Currently, Establishment Clau se jurisprudence incorporates a number of tests when evaluating the constitutionality of government action. Two are relevant to this case: the test announced in Lemon v. Kur tz man , 403 U.S. 602 (1971), and the “historical signi fi cance” test of Town of Greece v. Galloway, 572 U.S. 565, 576 (2014). 6 Because the Supreme Court has not clari fi ed which should take precedence, we evaluate FFRF’s claims under both tests and associated case law. See Concord , 885 F.3d at 1045 n.1 (“Indeed, there is debate among the Justices about the continuing validity of the endorsement test. ... For now, we do not feel free to je tt ison that test altogether ... .”). 7 We consider this case under the Lemon test in

6 A third relevant to this challeng e, the endorsement test, clarifies Lemon and is woven into our consideration of § 107(2) under the Lemon test, particularly under the second prong. See, e.g. , Freedom from Religion Found., Inc. v. City of Marshfield, Wis ., 203 F.3d 487, 493 (7th Cir. 2000), as amended on denial of reh ʹ g and reh ʹ g en banc (Mar. 22, 2000) (“[T]he effect prong of [the Lemon ] test has been analyzed under the ‘perception of endorsement’ test developed in Lynch v. Donnelly , 465 U.S. 668, 690 (1984) (O’Connor, J., concurring).”).

7 An amicus brief filed by Wisconsi n and fifteen other states notes the Supreme Court has not applied the Lemon test to a religious freedom case in many years. Even so, until the Supreme Court explicitly overturns Lemon we must apply it, as well as the other tests more recently relied upon by the Court. Other circuit cour ts also apply multiple tests when considering a challenge under the Establishment Clause. See, e.g. , American Humanist Assoc. v. McCarty, 851 F.3d 521, 525–26 (5th Cir. 2017) (balancing the Lemon , endorsement, and coercion tests against the historical significance test in Town of Greece ); Smith v. Jefferson Cty. Bd. of Sch. Comm’rs , 788 F.3d 580, 586–87 (6th Cir. 2015) (setting forth Lemon , the endorsement test, and Town of Greece as the “three main jurisprudential threads” thatmust be woven together in assessing government action under the Establishment Clause).10 Nos. 18-1277 & 18-1280

this Part of this opinion, and under the “historical signi fi

cance” test in Part IV.

Lemon summarized prior case law into a three-prong test: “[f]irst, the statute must have a secular legislative purpose; second, its principal or primary e ff ect must be one that neither advances nor inhibits religion; fi nally, the statute must not foster an excessive government entanglement with religion.” 403 U.S. at 612–13 (internal citations and quotations omi tt ed). This test is not cumulative : if § 107(2) fails any of Lemon ’s three prongs, it violates the Establishment Clause.

A. Secular Legislative Purpose

We fi rst examine whether § 107(2) has a secular legislative purpose. “When the government acts with the ostensible and predominant purpose of advancing religion, it violates that central Establishment Clause value of o ffi cial religious neutrality, there being no neutra lity when the government’s ostensible object is to take sides.” McCreary Cty., Ky. v. Am. Civil Liberties Union of Ky. , 545 U.S. 844, 860 (2005) (citing Corporation of Presiding Bishop of Church of Jesus Christ of La tt er-day Saints v. Amos , 483 U.S. 327, 330 (1987)). A statute is unconstitutional under this test “only when ... there [is] no questionthat the statute ... was motivated wholly by religious considerations.” Lynch v. Donnelly, 465 U.S. 668, 680 (1984). The Treasury Department and interv enors point to three secular legislative purposes of the statute: to eliminate discriminationagainst ministers, to eliminate discrimination between ministers, and to avoid excessive entanglement with religion. FFRFcounters that § 107(2) was passed to confer a government bene fi t on religion, which necessarily violates the Establishment Clause.Nos. 18-1277 & 18-1280 11

We will defer to a government’s sincere articulation of secular purpose, so long as the plainti ff s have not proved that articulation of purpose is a sham. Edwards v. Aguillard , 482 U.S. 578, 586–87 (1987) (“While th e Court is normally deferential to a State’s articulation of a secular purpose, it is required that the statement of such purpose be sincere and not a sham.”); Cohen v. City of Des Plaines , 8 F.3d 484, 489 (7thCir. 1993) (“We will defer to a municipality’s sincere articulation of a secular purpose.”). This does not mean “that the law’s purpose must be unrelated to religion ... .” Amos , 483 U.S. at 335. Instead, “the government lacks a secular purpose under Lemon only when ‘there is no question that the statuteor activity was motivated wholly by religious considerations.’” Milwaukee Deputy Sheri ff

s’ Ass’n v. Clarke , 588 F.3d 523, 527–28 (7th Cir. 2009) (quoting Books v. Elkhart Cty. , 401 F.3d 857, 863 (7th Cir. 2005), in turn quoting Lynch , 465 U.S. at 680).So we evaluate the purposes articulated by the Treasury Department to determine whether they are sincere, or whether the government’s “‘actual purp ose is to endorse or disapprove of religion.’” Edwards , 482 U.S. at 585 (quoting Lynch , 465 U.S. at 690 (O’Connor, J., concurring)). The Treasury Department fi rst contends Congress passed§ 107 to put ministers on equal footing with secular employees receiving the same bene fi ts; in other words, to eliminate discrimination against minister s. The Treasury Departmentpoints to its 1921 decision to not exclude parsonages from taxable income and Congress’s quick passage of the parsonage exemption, now codi fi ed at § 107(1), in response. The Treasury Department argues this is a secular purpose because it simply places religious employ ees on par with secular ones. FFRF counters that the bene fi ts given to ministers under § 107(2) are di ff erent—and be tt er—than those the tax code12 Nos. 18-1277 & 18-1280

gives to secular employees. FFRF argues pu tt ing ministers in a be tt er position than secular employees promotes the dissemination of religious ideas and thus cannot be secular. To determine whether § 107(2) confers a special bene fi t, or simply integrates ministers into an existing tax system, we must delve into the convenience-of-the-employer doctrine. Though the doctrine was originally developed in Treasury Department regulations, it has since been codi fi ed in severalplaces. The principal statute is 26 U.S.C. § 119(a)(2) and exempts meals and lodging furnished to employees if they meet fi ve requirements: the meal or lodging is furnished (1) by an employer to an employee, (2) in kind (as opposed to in cash),(3) on the business premises of the employer, (4) for the convenience of the employer, and (5) as a condition of employment. See also 26 C.F.R. § 1.119-1(b) (2018). This exemption applies generally: any qualif ying employee can rely on § 119(a)(2), including religious employees. 8 The express proof requirements of § 119(a)(2) are relaxedthroughout the tax code for various types of employees. Section 119(c) exempts employees living in a foreign camp from needing to ful fi ll the “business premises ” and “condition of employment” factors. Section 119(d) exempts certain teachersand university employees from the convenience-of-theemployer doctrine altogether, and allows them to exclude from taxable income the fair rent al value of campus housing. Myriad provisions in Title 26 employ this categorical approach and exempt any form of housing bene fi ts, whether

8 For additional history on the deve lopment of the convenience-of-theemployer doctrine, see Commissioner v. Kowalski , 434 U.S. 77, 84–96 (1977).Nos. 18-1277 & 18-1280 13

in cash or in kind: § 132 and § 162 exclude housing provided to an employee away on business for less than a year; § 134 excludes housing provided to current or former members ofthe military; § 911 excludes housing above a certain level provided to citizens or residents living abroad; § 912 excludes housing provided to government employees living abroad; and, of course, § 107 excludes ho using provided to ministers. These categorical exemptions allow hundreds of thousands of employees (including ministers) to receive tax-exempthousing every year without needing to satisfy the proof requirements of § 119(a)(2).These parallel provisions show an overarching arrangement in the tax code to exem pt employer-provided housing for employees with certain job-related housing requirements. Congress has exempted certain ca tegories of employees from complying with the speci fi c requirements of § 119(a)(2) to simplify the application of the convenience-of-the-employerdoctrine to those occupations. Section 107, including subsection (2), recognizes ministers of ten use their homes as part of their ministry. This provision th us eases the administration of the convenience-of-the-employer doctrine by providing a bright-line rule, instead of re quiring that ministers and the IRS repeatedly engage with a fact-intensive standard.Reading § 107(2) in isolation from the other convenienceof-the-employer provisions, and then highlighting the term“minister,” could make the challenged statute appear to provide a government bene fi t exclusively to the religious. But reading it in context, as we must, we see § 107(2) is simply one of many per se rules that provide a tax exemption to employees with work-related housing requirements. See A NTONIN14 Nos. 18-1277 & 18-1280

S CALIA & B RYAN A. G ARNER , R EADING L AW 252 (2012) (“‘Several acts in pari materia , and relating to the same subject, are tobe taken together, and compared in construction of them, because they are considered as ha ving one object in view, and as acting upon one system.’”) (quoting 1 James Kent, Commentaries on American Law 433 (1826)); see also Mueller v. Allen , 463 U.S. 388, 396 (1983) (upholding Minnesota tax deduction for tuition expenses, primarily used by parents of children at sectarian schools, in part becaus e the deduction was “only oneamong many deductions—such as those for medical expenses ... and charitable contributions ... available under theMinnesota tax laws”). Congress’s policy choice to ease the administration of the convenience-of-the-employer doctrine by applying a categorical exclusion is a secular purpose, not “motivated wholly by religious considerations.” Lynch , 465 U.S. at 680. FFRF argues considering the context of § 107(2) is inapt. To FFRF, the bene fi ts the statute provides apply to a broadercategory of persons—any minister, as opposed to any minister that uses his or her home for religious purposes—thanother categorical housing exclusions in the tax code. The district court agreed, and found that § 107(2) is not analogous to other bright-line housing bene fi t provisions in the tax code because, in comparison, it is overinclusive. Gaylor, 278F. Supp. 3d at 1095 (“[Sections 134, 911, and 912] relate to employees whose housing is necessarily a ff ected by their jobs. ... Some ministers may be in a similar situation ... but by no means are all ministers so restricted ... .”) (emphasis in original). It is not immediately apparent that § 107(2) is broader than the other categorical exemptions for employee housing. ForNos. 18-1277 & 18-1280 15

example, under 26 U.S.C. § 911, any person living abroad is permi tt ed to exclude or deduct housing expenses, regardless whether that person is living abro ad at the behest of his or her employer. But to the extent § 107(2) may be overinclusive, that alone does not render the statute unconstitutional. FFRF’s argument is a critique of categorical rules generally, rather than of § 107(2) speci fi cally. “Read literally, rules are generally overinclusive and underinclusive if assessed by references to their purposes. There is always a gap between the justi fi cation for a rule ... and the rule itself.” Cass R. Sunstein, Problems with Rules , 83 C ALIF

. L. R EV . 953, 990–91 (1995). No rule will perfectly address the concerns to which it is addressed, because “[a]ll generalizations ... are to some degree invalid, and hence every rule of law has a few corners that do not quite fi t.” Antonin Scalia, The Rule of Law as a Law of Rules , 56 U. C HI

. L. R EV

. 1175, 1177 (1989). Categorical rules sacri fi ce precision of resultfor administrative ease and equality of result. So it is not surprising that § 107(2) covers some housing allowances that may be excluded under a case-b y-case discretionary standard. In this respect, § 107(2) is not an outlier. Important to our consideration, any imprecision does notmake § 107(2) any less analogous to other “convenience-ofthe-employer” related provisions in the tax code. Each covers a di ff erent subset of eligible taxp ayers and activities, but they all serve a common purpose: excluding from taxable income certain employment-related expenses. The constitutionality of § 107(2) does not turn on which ministers the statute includes or excludes. See, e.g. , Kowalski , 434 U.S. at 95–96 (“[A]rguments of equity have li tt le force in construing the boundaries of exclusions and deductions from income many16 Nos. 18-1277 & 18-1280

of which, to be administrable, must be arbitrary.”); Delong v. Dep ʹ t of Health & Human Servs ., 264 F.3d 1334, 1343 (Fed. Cir. 2001) (“ Like all bright line rules, [the statute] is both overinclusive and under-inclusive, but the imprecision of the statute does not make it unconstitutional.”).The second secular legislative purpose cited by the Treasury Department is elimination of discrimination between ministers. The government argues Congress passed § 107(2) because providing the tax exempt ion only to ministers given in-kind housing tended to excl ude ministers of smaller or poorer denominations. FFRF argues this is a sham and the true justi fi cation was to subsidize religion, based on a statement made in the early 1950s by § 107(2)’s sponsoring representative Peter Mack: “Certainly , in these times when we are being threatened by a godless and antireligious world movement we should correct this discrimination against certain ministers who are carrying on such a courageous fi ght against this foe.” Hearings Before the Commi tt ee on Ways and Means: Statement of Hon. Peter F. Mack, Jr., on H.R. 4275, Concerning the Taxability of a Cash Allowance Paid to Clergymen in Lieu of Furnishing Them a Dwelling, 83d. Cong. 1, at 1576 (June 9, 1953). The Treasury Department and intervenors respond by quoting other statements by Representative Mack from the same hearing, such as that the bill was proposed because “present tax laws are discriminatory among our clergy,” id. at 1574–75, and because he believed “a serious injustice [was] being done to those ministers who must provide their own home,” id. at 1576.

This sma tt ering of legislative history does not establish Representative Mack’s motives in proposing the bill. Even ifNos. 18-1277 & 18-1280 17

his fi rst quote above did so, the motivation of one representative in a House of 435 does not de fi nitively reveal the impetus behind the bill’s passage. At th e same hearing, other representatives stated di ff erent motives. Speaking on the same proposed provision, Representative Ray G. McKennan said the changes were proposed to “create an equitable condition for ministers similarly situated, and would probably eliminate court action [by ministers suing for discrimination].” Id. at 1574. The legislative record does not establish a singular motive behind § 107(2). Con fl icting statements among members of Congress—even by the same member—reveal the unreliability of this legislative history. Certainly, these statements do not render “a sham” the Treasury Department’s pro ff ered purpose of avoiding discrimination among religions. Cf. Edwards , 482 U.S. at 586–87. As such, we take the government at its word, which resolves this question. “The clearest command of the Establishment Clause is that one religious denomination cannot be o ffi cially preferred over another.” Larson v. Valente , 456 U.S. 228, 244 (1982). Avoidance of discrimination against certain religions in favor of others is a permissible secular legislative purpose. The third secular legislative purpose cited by the Treasury Department is to avoid excessive entanglement with religion. To the government, Congress’s de cision to exempt ministers from the proof requirements of § 119(a)(2) prevents the IRSfrom conducting intrusive inquiries into how religious organizations use their facilities. See, e.g. , Amos , 483 U.S. at 339 (“avoid[ing] ... intrusive inquir y into religious belief ...” prevents entanglement). FFRF resp onds that § 107(2) does not18 Nos. 18-1277 & 18-1280

avoid such entanglement because the IRS must still administer a test to determine whethe r a taxpayer qualifies as a minister. FFRF argues this is as fact-intensive an audit as the inquiry administered for the generally applicable statutory exemption, § 119(a)(2).On this entanglement question, two Supreme Court decisions are particularly instructive. In Walz v. Tax Comm. of City of N.Y. , the Court upheld a New York property tax exemption for properties owned by churches and used exclusively for religious worship. Walz disagreed with the lower court’s examination of churches’ contributi on to the social welfare to determine whether the tax exemption had a secular purpose: To give emphasis to so v ariable an aspect of the work of religious bodies would introduce anelement of governmental evaluation and standards as to the worth of particular social welfare programs, thus producing a kind of continuing day-to-day relationship which the policy of neutrality seeks to minimize. 397 U.S. at 674. Similarly, in Amos v. Corporation of the Presiding Bishop of the Church of Jesus Christ of La tt er-day Saints , the Supreme Court upheld a categorical exemption for religious organizations from the provisio ns of Title VII of the Civil Rights Act of 1964. The opinion noted that, under Lemon , “it is a permissible legislative purpose to alleviate signi fi cantgovernmental interference with the ability of religious organizations to de fi ne and carry out their religious missions.” Amos , 483 U.S. at 335. Any fi nancial interaction between religion and government—like taxing a church, or exempting it from tax—entailsNos. 18-1277 & 18-1280 19

some degree of entanglement. But only excessive entanglement violates the Establishment Clause. See Walz , 307 U.S. at 674 (“We must also be sure that the end result—the e ff ect—is not an excessive government entanglement with religion.”)Crucial to our evaluation, the Supreme Court has already permi tt ed the level of entanglement incurred under § 107(2). In Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC
,565 U.S. 171 (2012), the Court inquired into the facts underlying Hosanna-Tabor’s employment to determine whether she was a minister. Id. at 190–92. The IRS does the same under § 107(2) to determine whether a taxpayer quali fi es as a minister. The Court would not have so inquired if it violated the Establishment Clause. In contrast, the application of § 119(a)(2) to ministers would entangle church and state far more than under§ 107(2). For example, to determine what constitutes the business premises of the employer under § 119(a)(2), the IRS would have to determine what the “business” of the church is and where and how far the “premi ses” of the church extend. See E DWARD A. Z ELINSKY , T AXING THE C HURCH 168–69 (2017). To do so, the IRS would need to interrogate ministers on the speci fi cs of their worship activities, even determine which activities constitute “worship.” Such government inquiries into the internal a ff airs of churches to determine their eligibility for tax relief have been rejected as excessive entanglement. See, e.g. , Serbian E. Orthodox Diocese for U.S. of Am. & Canada v. Milivojevich , 426 U.S. 696, 708–20 (1976) (holding civil courts cannot interfere with the rulings of ecclesiastical tribunals on church a ff airs); Schleicher v. Salvation Army, 518 F.3d 472, 475 (7th Cir. 2008) (“Congress does not want courts to interfere in the internal management of churches ... .”).20 Nos. 18-1277 & 18-1280

Worse, if subject to § 119(a)(2), congregations might alter their religious activities to a tt empt to conform with its requirements. Congress enacted § 107(2) in part to avoid that. And congressional action “to minimize governmental interference with the decision-makin g process in religions ... does not violate the Establishment Clause.” Amos , 483 U.S. at 336 (internal citations and quotations omi tt ed). The categorical nature of § 107(2) also avoids excessiveentanglement by providing ministers and their churches certainty as to whether their housing allowances will be exempt from tax. In Amos , the Supreme Court held “it is a signi fi cant burden on a religious organization to require it, on pain of substantial liability, to predict wh ich of its activities a secular court will consider religious.” Amos , 483 U.S. at 336. Recognizing the potentially excessive entanglement threatened by the application of§ 119(a)(2) to ministers, Congress enacted a less-entangling tax exemption. Seeking toavoid government entanglement is a secular legislative purpose under Lemon

. See, e.g. , Medina v. Catholic Health Initiatives
, 877 F.3d 1213, 1231 (10th Cir. 2017) (“[T]he Supreme Court hasexpressly held that a purpose of avoiding government entanglement does not violate the Es tablishment Clause.”) (citing Amos , 483 U.S. at 335). Because the government has articulated not one, but three secular purposes, we conclude the fi rst prong of Lemon is satis fi ed.

B. Primary E ff

ect of Advancing or Inhibiting Religion The second prong of the Lemon test requires that a statute have a “principal or primary e ff ect ... that neither advances nor inhibits religion.” Lemon , 403 U.S. at 612. “For a law to have forbidden ‘e ff ects’ under Lemon , it must be fair to sayNos. 18-1277 & 18-1280 21

that the government itself has advanced religion through its own activities and in fl uence.” Amos , 483 U.S. at 337 (emphasis in original). This entails “sponsorship, fi nancial support, and active involvement of the sovereign in religious activity.” Walz , 297 U.S. at 668. FFRF contends the Supreme Court’s holdings in Amos and Walz were superseded by Justic e Brennan’s plurality opinion in Texas Monthly, Inc. v. Bullock , 489 U.S. 1 (1989). That caseresolved an Establishment Clause challenge to a state tax exemption for religious publications. To determine whether Justice Brennan’s opinion controls, we examine the grounds for decision in Texas Monthly ’s various concurrences. See Marks v. United States , 430 U.S. 188, 193 (1977) (“When a fragmented Court decides a case and no single rationale explaining the result enjoys the assent of fi ve Justices, the holding of the Court may be viewed as that position taken by those Members who concurred in the judgments on the narrowest grounds.”).

In Texas Monthly , Justice Brennan authored an opinion joined by Justice Marshall and Justice Stevens and announced the result of the case; Justice White concurred in the result and wrote separately; Justice Blackmun concurred in the result and wrote for himself and Justice O’Connor; and Justice Scalia fi led a dissenting opinion, joined by Chief Justice Rehnquist and Justice Kennedy. Justice Brennan’s opinion concluded that the tax exemption for religious publications violated theEstablishment Clause because “[e]very tax exemption constitutes a subsidy that a ff ects nonqualifying taxpayers.” Texas Monthly , 489 U.S. at 14 (Brennan, J., plurality opinion). He stated any subsidy directed “exclusively to religious organi-22 Nos. 18-1277 & 18-1280

zations that is not required by the Free Exercise Clause ... cannot but convey a message of endorsement to slighted members of the community.” Id. at 15 (internal citations and quotations omi tt ed). The other opinions in Texas Monthly were narrower in scope. Justice White’s concurre nce reached the same result, but on an independent ground, the Press Clause. JusticeBlackmun’s concurrence agreed that the tax exemption violated the Establishment Clause , but did not adopt many of Justice Brennan’s sweeping statements. Justice Blackmun urged that the case be resolv ed narrowly and concluded only that “a tax exemption limited to the sale of religious literature by religious organizations violates the Establishment Clause.” Id. at 28 (Blackmun, J., concurring) (emphasis in original). Because Justice Blackmun decided the case on Establishment Clause grounds, 9 and on a narrower basis than Justice Brennan’s opinion, under the Marks rule Justice Blackmun’s concurrence sets the rule of decision of Texas Monthly . Hisconcurrence did not comment on what constitutes a forbidden e ff ect under Lemon , so Texas Monthly does not alter our analysis of this second prong.

9 Even if Justice White’s opinion were based on narrower groundsthan Justice Blackmun’s opinion, it reached the same result under a different constitutional clause. “ Marks applies ‘only when one opinion is a logical subset of other, broader opinions.’” Gibson v. American Cyanamid Co.
, 760 F.3d 600, 619 (7th Cir. 2014) (quoting King v. Palmer , 950 F.2d 771, 781 (D.C. Cir. 1991) (en banc)). Justice Blackmun’s opinion provided the fourth and fifth votes in Texas Monthly and shared the “common denominator” of resolving the issue under the Establishment Clause, so it controls. Gibson , 760 F.3d at 619 (quoting United States v. Heron , 564 F.3d 879, 884 (7th Cir. 2009)).Nos. 18-1277 & 18-1280 23

With Walz and Amos still in e ff ect, we evaluate forbidden

e ff ects under their framework. FFRF contends a tax exemption for religion is identical to a government subsidy for religion. In economic terms, a subsidy and a tax exemption may have the same practical impact. See, e.g. , Adam Chodorow, The Parsonage Allowance , 51 U.C. D AVIS L. R EV . 849, 854 (2018) (“The claim that exemptions di ff er from direct subsidies for Establishment Clause purposes simply ignores economic reality.”). But the Supreme Court has already found a constitutionally signi fi cant di ff erence between the two on taxing religion. “The grant of a tax exemption is not sponsorship since the government does not transfer part of its revenue to churches but simply abstains from demanding that the church support the state.” Walz , 397 U.S. at 675. 10

Under Walz and Amos , then, § 107(2) does not advance religion on behalf of the government. Providing a tax exemption does not “connote[] sponsorship, fi nancial support, and active involvement of the [government] in religious activity” under Walz , 397 U.S. at 668; see also Amos , 483 U.S. at 337 (“[W]e donot see how any advancement of religion achieved by the [exempt religious organization] can be fairly a tt ributed to the Government, as opposed to the Church.”). Under these precedents, the primary e ff ect of § 107(2) is not to advance religion on behalf of the government, but to

10 The Supreme Court tacitly reaffirmed this approach in its standing discussion in Arizona Christian Sch. Tuition Org. v. Winn , 536 U.S. 125 (2011). There, it held taxpayers had no standing to challenge a tax creditdirected primarily towards sectarian schools because “[w]hen the government declines to impose a tax, ... th ere is no ... connection between dissenting taxpayer and alleged establishment.” Id . at 142.24 Nos. 18-1277 & 18-1280

“ allow [] churches to advance religion, which is their very purpose.” Amos , 483 U.S. at 337 (emphasis in original). So § 107(2) passes the second prong of Lemon

. C. Excessive Entanglement with Religion The third prong of the Lemon test is whether the state “foster[s] ‘an excessive government entanglement with religion.’” Lemon , 403 U.S. at 613 (quoting Walz , 397 U.S. at 674). We have addressed this prong in Part III.A above. Because some level of church-state interaction is unavoidable, “[e]ntanglement is a question of kind and degree.” Lynch , 465 U.S. at 684. Section 107(2) avoids government inquiry into the use of a minister’s home, but it still requires the IRS to determine who quali fi es as a minister eligible for the exemption. Even if the IRS’s test for who quali fi es as a minister involves entanglement, it is of a nature approved by the Supreme Court in Hosanna-Tabor

. See Hosanna-Tabor, 565 U.S. at 190–95 (engaging in a fact-bound analysis to determine whether the petitioner quali fi ed as a minister). The alternative would be toforce ministers to comply with the far more detailed and particular, and thus more entangling , requirements of § 119(a)(2). In answer to these concerns, Congress chose to enact § 107(2). Legislative determinat ions about the Establishment Clause, while not binding, are entitled to deference. “We in the Judiciary must be wary of interpreting [the Religion]Clauses in a manner that negates the legislative role altogether.” Texas Monthly , 489 U.S. at 28 (Blackmun, J., concurring). Legislative deference is particularly great for classi fi cations in tax legislation. See, e.g. , Regan v. Taxation with Representation of Washington , 461 U.S. 540, 547 (1997) (“Legislatures have especially broad latitude in creating classi fi cations and distinctions in tax statutes.”); Madden v. Kentucky ,Nos. 18-1277 & 18-1280 25

309 U.S. 83, 88 (1940) (holding that for tax classi fi cations challenged under the Fourteenth Amendment, “the presumption of constitutionality can be overco me only by the most explicit demonstration that a classi fi cation is a hostile and oppressive discrimination against particular persons and classes”). Congress decided § 107(2) is the less entangling option, so we will not disturb it. We conclude § 107(2) has a secular legislative purpose, its principal e ff ect is neither to endorse nor to inhibit religion, and it does not cause excessive government entanglement. Here, “[t]here is no genuin e nexus between tax exemption and establishment of religion.” Walz , 397 U.S. at 675. Section 107(2), then, does not violate th e Establishment Clause under the Lemon test.

IV. We next examine whether § 107(2) passes the historical signi fi cance test. 11 The Supreme Court has held “the Establishment Clause must be interp reted ‘by reference to historical practices and understandings.’” Town of Greece v. Galloway , 572 U.S. 565, 576 (2014) (quoting Cty. of Allegheny v. Am. Civil

11 FFRF and amici curiae supporting appellees’ position offer no arguments under the historical significance test, except to assert the test applies only to legislative prayer. We find no such limitation. Though Town of Greece addressed legislative prayer, it stated that “the EstablishmentClause must be interpreted ‘by reference to historical practices and understandings.’” 572 U.S. at 576 (quoting Cty. of Allegheny , 492 U.S. at 670 (Kennedy, J., concurring in judgment in part and dissenting in part)). This language does not limit the application of the Town of Greece standard to constitutional challenges to legislative prayer. As this part discusses, other Supreme Court cases have examined relevant history as to monuments as well as the ministerial exception.26 Nos. 18-1277 & 18-1280

Liberties Union Greater Pi tt sburgh Chapter, 492 U.S. 573, 670 (1989) (Kennedy, J., concurring in judgment in part and dissenting in part)). This fact-bound test was developed in three cases. First, in Van Orden v. Perry , 545 U.S. 677 (2005) (plurality opinion), the Court considered whether a monument inscribed with the Ten Commandments on Texas government property violated the Establishment Clause. Van Orden criticized the Lemon test for ignoring the “strong role played by religion and religious traditions throughout our Nation’s history.” Id. at 683. Instead, the Court reviewed a number ofhistorical examples of governments referencing God and displaying the Ten Commandments wi thout issue. On that basis,the Court held the monument did not violate the Establishment Clause. Id. at 692.
Next, in Hosanna-Tabor , a unanimous Supreme Court heldthat the Establishment Clause prevents governments from interfering with the decision of a religious group to terminate one of its ministers. In so de ciding, the opinion explored thehistory of church-state relations in the United States and England, back to the Magna Carta. Hosanna-Tabor , 565 U.S. at 182. From that history, the Cour t determined that the First Amendment was adopted in part to prevent “the new Federal Government—unlike the Englis h Crown—[from a] role in fi lling ecclesiastical o ffi ces.” Id. at 184. This determination formed the basis of the Court’s decision. Finally, in Town of Greece the Supreme Court applied the historical signi fi cance test when it held legislative prayer does not violate the Establishment Clause. The Court held that “[a]ny test the Court adopts [for the Establishment Clause]Nos. 18-1277 & 18-1280 27

must acknowledge a practice th at was accepted by the Framers and has withstood the critical scrutiny of time and political change.” Town of Greece , 572 U.S. at 577. We now apply the historical sign ificance test to this case.FFRF offers no evidence that provisions like § 107(2) were historically viewed as an establishment of religion. The government and intervenors, and amici curiae supporting their position, have provided substantial evidence of a lengthy tradition of tax exemptions for religion, particularly for church-owned properties. For ov er two centuries, the states have implemented church proper ty tax exemptions in various forms. See John Witte, Jr., Tax Exemption of Church Property: Historical Anomaly or Valid Constitutional Practice? , 64 S. C AL

. L. R EV . 363, 380 (1991) (“The colonial law exemption of churchproperty continued largely uninterrupted in the early decades of the American republic.”); see also id. at 389–95 (detailing state protections for religious tax exemptions from the late19th to early 20th centuries). When challenged on establishment grounds, such tax exemptions typically have been upheld. See, e.g. , Trustees of Griswold College v. State , 46 Iowa 275, 282 (1877) (ruling the state constitution’s Establishment Clause “does not [implicate] th e exemption from taxation of such church property as the legislature may think proper”). Congress has enacted federal tax exemptions for religious organizations as far back as 1802, when it permitted the County of Alexandria (then unde r federal control) to exempt church property from taxation, see 7 Cong. Ch. 53, May 3, 1802, 2 Stat. 194, and as recently as 2002, the last time § 107 was amended. See Clergy Housing Allowance Clarification Act of 2002, Pub. L. No. 107–181, 116 Stat. 583. As early as28 Nos. 18-1277 & 18-1280

1885, the U.S. Supreme Court acknowledged and accepted religious property tax exemptions in Gibbons v. District of Columbia , 116 U.S. 404 (1886), “reflecting more than a century of our history and uninterrupted practice.” Walz , 397 U.S. at 680. Today, more than 2,600 federal and state tax laws provide religious exemptions. N INA J. C RIMM & L AURENCE H. W INER , P OLITICS , T AXES , AND THE P ULPIT : P ROVOCATIVE F IRST A MENDMENT C ONFLICTS 43 (2011). The district court distinguished § 107(2) from this longand continuing historical tradition of property tax exemptions by noting the statute is an income tax exemption. We find this too fine a distinction, as it ignores the impact of the Sixteenth Amendment. Before 1913, Congress could not constitutionally tax housing provided to ministers as part of their income. See Pollock v. Farmers’ Loan & Trust Co. , 158 U.S. 601, 637 (1895) (invalidating a state income tax). Within a few years of income becoming taxable, Congress moved to exclude parsonages from income , and a few decades later excluded cash housing allowances as well. Congress was continuing its “historical practice[]” of exempting certain church resources from taxation. Town of Greece , 572 U.S. at 576. This endeavor limits entanglement between church and state, see supra at Part III.C. Given this history, we conclude § 107(2) does not violate the Establishment Clause under the historical significance test.

V. FFRF claims § 107(2) renders unto God that which is Caesar’s. But this tax provision falls into the play between the joints of the Free Exercise Clause and the Establishment Clause: neither commanded by the former, nor proscribed byNos. 18-1277 & 18-1280 29

the la tt er. We conclude § 107(2) is constitutional. The judgment of the district court is R EVERSED

.