Source: https://blog.harvardlawreview.org/recent-case-_gaylor-v-mnuchin_/
Timestamp: 2019-04-25 08:41:23+00:00

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Can tax benefits “establish” a religion? Perhaps, but as long as they show neutrality, meaning “no preference” for religion, they can pass muster.
The Internal Revenue Code establishes numerous income tax exemptions, one genre of which falls under the “convenience-of-the employer” doctrine. This doctrine is primarily codified in 26 U.S.C. §119(a)(2), which exempts employer-provided meals and lodging if they meet a five-part test. However, a variety of categorical exceptions apply to the five-part test: Housing provided to current or former members of the military (§134), housing provided to employees away on business for less than a year (§132, 162), housing provided to government employees living abroad (§912), and housing provided to ministers (26 U.S.C. §107).
Recently, in Gaylor v. Mnuchin, the Seventh Circuit held that the exemption for minister housing did not violate the Establishment Clause. In reaching its conclusion, the court considered a variety of competing Establishment Clause tests, demonstrating the need for a Supreme Court opinion establishing which test should control.
The plaintiffs brought their suit against the Internal Revenue Service in federal district court. The District Court granted summary judgment in favor of the plaintiffs. The court reasoned that the plain language of the statute, the legislative history, and its operation in practice all demonstrate a preference for ministers over secular employees.
The Seventh Circuit reversed. Writing for the panel, Judge Brennan analyzed the case under two tests crafted by the Supreme Court in their Establishment Clause jurisprudence: the Lemon v. Kutzman (1971) test and the more recent “historical significance” test.
The third legislative purpose was to avoid excessive entanglement with religion. By creating a categorical exception for ministers, the IRS could abstain from intrusive inquiries, often required by the status quo exemption of §119, into how religious organizations use their facilities.
The third prong of the Lemon test asks whether the state “fosters an excessive government entanglement with religion.” Again, Judge Brennan concluded that the statute actually reduces entanglement compared with the status quo of §119, which has an evidence-intensive five-part test.
Finally, Judge Brennan turned to the historical significance test that the Supreme Court developed in three recent cases. Interestingly, the plaintiffs “offered no arguments under the historical significance test, except to assert the test applies only to legislative prayer.” Judge Brennan rejected this conclusion, pointing out that Supreme Court cases have applied the test to a case about a monument, to a conflict between the federal government and a church over employment law, and to a case about legislative prayer.
The plaintiffs failed to offer evidence that the tax exemption at issue was “historically viewed as an establishment of religion.” On the contrary, Judge Brennan found that for over two hundred years, state and federal laws have enacted tax exemptions for religious groups and their property, which have typically been upheld.
Gaylor v. Mnuchin is yet another case that highlights the Supreme Court’s indeterminate Establishment Clause jurisprudence, demonstrating the need for the Court to clarify which test should control. In this case, the Seventh Circuit took the same approach as other circuits: the court assumed that the Lemon test controls, but used the “historical significance” test to support its analysis. Judge Brennan addressed this indeterminate jurisprudence, noting that the Supreme Court has not used the Lemon test in a religious freedom case in “many years.” The Supreme Court has relied more recently on “historical significance,” and some Justices have promoted other tests such as the coercion and endorsement tests. Perhaps the Supreme Court will soon resolve some of this indeterminacy.
Despite the complicated jurisprudential landscape, the Seventh Circuit deftly navigated the competing tests and accurately characterized the tax exemption at issue here: one provided to employees of secular and religious institutions alike.

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