Some believe that if you put money in the hands of corporations and in the hands of the rich, their spending will keep the economy going. This theory is called “trickle-down economics.” At NETWORK, we believe that spending by middle and low-income people is more likely to keep the economy going.
For example, imagine that $1 million is given to a wealthy person; he or she might buy an exquisite piece of jewelry and an expensive car—and then invest the rest (if any!). Several people have benefited from the spending, but not very many.
Now imagine that same $1 million is given to 2,000 middle and low-income people--$500 each. Whether you picture them spending it on rent, needed car repairs, or the cell phone they’ve always wanted, more of the money will be spent, more people will benefit, and as a consequence, the economy will receive a greater boost.
Our views differ from the dominant view in another important way. Proponents of trickle-down economics believe there should be tax cuts for large corporations and for the rich. NETWORK, on the other hand, believes in a fair tax system.
Two principles of Catholic Social Teaching underlie our concept of just taxation:
- People who have more pay more (progessivity).
- Tax income should be spent on the people who really need it (distributive justice).
Consequently, a just tax system:
- raises adequate revenues to address human needs
- is progressive
- offers incentives for behavior that clearly benefits the common good (e.g., tax credits for education of low-income youth)
- is efficient and simple to administer.