Indiana Law Journal

Document Type


Publication Date

Winter 2021

Publication Citation

96 Indiana Law Journal 521 (2021)


In 2019, the Seventh Circuit decided an Establishment Clause question that had been percolating through the courts for two decades. It held that the parsonage allowance, which permits “ministers of the gospel” to receive an untaxed housing allowance, does not violate the Establishment Clause of the Constitution. It grounded its conclusion in part on the “historical significance” test the Supreme Court established in its Town of Greece v. Galloway decision.

In coming to that conclusion, the Seventh Circuit cited a 200-year unbroken history of property tax exemptions for religious property. According to the Seventh Circuit, that history demonstrated that both the Founders and subsequent generations of Americans recognized that there was no constitutional problem with exempting parsonages.

The court’s historical significance analysis was fundamentally flawed, however. Had the court actually engaged with this history, rather than made the conclusory assertion of consistent and uncontroversial exemption, it would have seen at least two things that complicated its facile conclusion. Significantly, in treating the history of religious property tax exemptions as unbroken and consistent, the court elided the actual history, which was messy and varied. The actual history provides no support for the proposition that the Framers and those who followed viewed property tax exemptions as constitutional.

Even if the history were as clean as the Seventh Circuit portrayed it, that history would have been irrelevant to the question of the constitutionality of the parsonage allowance. The Supreme Court did not incorporate the Establishment Clause against the states until 1947, so states faced no Establishment Clause bar to exempting for religious property. And the federal government only made four attempts at taxing property, none of which expressly exempted religious property.

In this Article, I explore the historical and current tax exemptions for parsonages, and trace how states arrived at their current exemptions. Ultimately, I conclude that the historical significance test, as applied by the Seventh Circuit, does not support the constitutionality of the parsonage allowance. I further conclude that, given its complexity and the fact that attorneys and judges tend to be poor historians, the historical significance test is not well suited as a jurisprudential tool for analyzing Establishment Clause questions, and that courts should not adopt it.