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Religious organizations enjoy many of the same benefits that other non-profit organizations do. Churches, temples and mosques, for example, generally are exempt from local real estate taxes. Economically speaking, a tax exemption has the same effect as a subsidy; freedom from tax liability means that the organization can devote its financial resources to other activities. But where an exemption afforded to a religious employee is broader than the equivalent exemption available to a secular employee, a significant Establishment Clause concern is raised. The parsonage exemption of Internal Revenue Code Section 107 presents such an issue: ministers are permitted to exclude cash housing allowances from their taxable income as a matter of course, even though the equivalent exemptions for secular employees are far more limited. Recently, however, in Gaylor v. Mnuchin, the United States Court of Appeals for the Seventh Circuit rejected the argument that the parsonage exemption violates the Establishment Clause. This Essay evaluates the court's reasoning and suggests that the decision minimized the extent to which the parsonage exemption provides active governmental support for religion. This minimization, we argue, led to a distorted Establishment Clause analysis and the wrong result. We also address an issue lurking in the background: the intersection between the parsonage exemption and sex discrimination, given that some religions do not permit women to serve in religious leadership roles that would qualify them as ministers under Section 107. Although the stronger constitutional argument against the parsonage exemption stems from the Establishment Clause, both issues raise important policy concerns.