A Just and Fair System of Taxation
"The
whole reason for the existence of public authorities is the realization
of the common good."
-John XXIII, Pacem in Terris, 1963
Background
To carry out its responsibilities the government has to have the means
to accomplish its tasks. This is where taxes come into play. One way that
citizens contribute to the accomplishment of the common good is through
paying taxes so that the welfare of all is tended to by the government.
Two principles
of Catholic Social Teaching underlie an understanding
of just taxation: progressivity and distributive justice. Economic
Justice for All, by the U.S. Catholic Bishops, states: "The tax system
should be structured according to the principle of progressivity so that
those with relatively greater financial resources pay a higher rate of
taxation".(#202) Distributive justice refers to the relationship between
society (the state) and the individual. It states that the goods and burdens
of society should be distributed according to one's need and one's ability
to contribute. The disbursement of tax monies should be applied to programs
in a way that benefits those most in need, and the collection of taxes
should come from those most able to pay. The principles of social justice
direct us to the priority of caring for those who are poor and vulnerable
in our society.
In their
pastoral, the U.S. Bishops also state clearly that all economic systems
should be evaluated on this criteria:
- What
it does to people,
- What
it does for people, and
- How those
who are affected are able to participate in the development of the system.
Taxes are
a vehicle through which we as responsible citizens, work with government
to promote the common good through the democratic process. It is the responsibility
of government to secure the right of each citizen to affordable housing,
access to quality and affordable health care, employment that provides
a livable wage and education. In working toward a just society the following
principles serve as criteria for creating and evaluating tax policies.
NETWORK's
Principles for Evaluating Federal Tax Policy
(Taken from Learning About Taxes: Toward A Just and
Fair System, a resource published by NETWORK
Education Program.
A just tax
system:
- raises
adequate revenues to pay for the public needs of society.
Taxes must raise enough revenue to promote the common welfare of the
nation by enabling payment of current expenses and interest on debts
from the past, as well as providing funds for future needs.
- is
progressive.
People with greater financial resources pay a higher rate of taxes while
the rate of middle and lower income people is at levels proportionate
to their income. Those at or below the poverty line are exempt from
income taxes. Taxes levied at the same rate for all people are considered
regressive in that they place a proportionateley higher tax on those
with lower incomes.
- offers
incentives for behavior which clearly benefits the common good.
Such incentives would be things such as: tax credits for hiring those
who are disadvantaged, education of low-income youth, home mortgages
for low and middle income families.
- redistributes
wealth to make a more equitable society.
The foundation of distributive justice is the redistribution of income
from those who are wealthy to those who are less wealthy. This is accomplished
through the levying of progressive taxes and includes incentives that
benefit the common good.
- does
not tax the income of those living below the official poverty line.
Those who are struggling to provide for their most basic economic needs
are exempt from paying federal income taxes and receive credits for
taxes they have paid (i.e. payroll taxes.)
- is
efficient and simple to administer.
Loopholes are eliminated and all pay their fair share. The complexities
of the system are reduced.
Tax issues
are ultimately questions of the role of government. What size does it
need to be? Who should control it? How can the payment of the nation's
bills be shared fairly among the citizenry? The tax system is also rooted
in the basic values of the nation as well. The whole notion of the appropriate
"business of the nation" is under debate, and ideological polarities around
this much larger issue underlie contentions about taxes.
For the
citizen, the payment of taxes is often conflictual. Fundamentally, the
question becomes: How does the individual citizen define the role of government
and their responsibility for and toward it? Randy Albeda, Research Director
of the Massachusetts Commission on Taxes, has stated that the most significant
aspect in this respect was the transformation of the self-concept of a
U.S. resident from being a "citizen" to that of "taxpayer." In the public
mind, the dominant focus has been shifted to the individual in conflict
with government. "MY" money is being taken away and for what?
But, even
citizens who see the tax system as rooted in the basic values of the nation,
as appropriate "business of the nation," citizens who understand that
the role of government is the promotion of the common welfare / common
good and that taxes contribute toward that end also ask questions:
- How is
the revenue from taxes being used? For whom, for what?
- Is the
burden of taxation really shared? Progressive?
- Why is
the process of paying taxes often so convoluted?
In all of
this, the most dangerous, slowly-growing trend is to subtly condemn those
who become economically disenfranchised, who live day-by-day on the very
tenuous safety net and judge them as burdens to the nation.
At this time in the nation's history, we might rightfully ask:
Isn't a surplus that which is left over after all debts and obligations
have been addressed? In a nation where 14 million children go to
bed hungry, where 40 million plus are without healthcare, where
the working poor do not make enough to make ends meet, where millions
cannot afford necessary prescription drugs, where the future marked
by an aging population demands that we strengthen our Social Security
and Medicare programs and where we have huge budget surpluses far
into the future, how do we in justice determine budget and taxation
priorities and policy?
Leadership
is required that is able to define the budget as a moral statement of
the nation's priorities in light of current fiscal, economic and social
realities.
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