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 these 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 these taxes place a proportionately 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.
- 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.
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