Regarding the clergy housing allowance tax exemption

I took Thanksgiving week off this year, and since Mrs. Curmudgeon and I spent the weekend preceding one of our best, if most-neglected, national holidays by going off the grid, I missed the news that a federal judge in Wisconsin had ruled the clergy housing allowance tax exemption unconstitutional. I learned of this upon our return to the webernet-saturated world when my plains-dwelling, stout beer-drinking, Star Trek-obsessed pastor friend asked my opinion. (Yes, it takes at least a few weeks after a week away to clear out my virtual in-box.)

The Religion News Service article I linked to above is better than most I've read on the subject as it gives the historical context of the tax exemption and, via a quote from Russell Moore, explains the implications of the ruling should it stand through the appeals process. The amount of income clergy spend on housing is exempt from taxation in order to put said clergy on an equal footing with their brethren who receive housing in the form of a parsonage (or manse). If that income becomes taxable, then Churches will have to pay their pastors more in order for their pastors to take on the added tax burden. Despite popular media fixation with wealthy clergy in suburban mega-churches, most congregations in this country are quite small, and many might struggle to swing even an extra thousand dollars in salary. (The presbytery in which I serve includes several rural congregations in the Dakotas, so I speak from experience and do not exaggerate when I write this.) 

Should the ruling stand, it seems to me, as a simple matter of logical and legal reasoning, inevitable that pastors who live in parsonages would also be taxed on the rental value of their residences as the functional equivalent of paid income. In other words, this ruling could affect every pastor and every congregation in these United States.

The substantive legal issue, in my opinion, is the relationship of clergy to the state in their capacity as private citizens. As tax law evidences, this is not easy to disentangle. Pastors receive several tax exemptions, benefits, and burdens that secular persons do, but the housing allowance exemption is available only to religious persons. For simplicity's sake, it would seem more reasonable under the First Amendment to treat the income of clergy as entirely tax-exempt: this would be more conducive to state non-interference in religious matters. For myself, however, I don't see that as a necessary conclusion. In fact, under the present constitutional regime, I can see good arguments for taxing the entirety of a pastor's income, as this would be treating him merely in the same manner as other private citizens.

It seems to me this ruling is of note less for what it says legally than for what it indicates about our broader culture. Since the Republic's founding, only cranks and misanthropes have had a problem with granting special privileges to religious institutions and persons. Only recently has that cultural consensus shifted. The First Amendment hasn't been repealed, but the day has now come when fewer and fewer of our citizens understand why it is that the state should make no law which might in any way impair the free exercise of religion.