Monday, October 18, 2010

The Morality of Taxes

A core conservative tenet is that raising taxes is bad economic policy. Two reasons are usually given for this. First, it punishes success by confiscating the wealth of our most industrious citizens, a punishment that creates disincentives to work. Second, it punishes the very people (the rich) on whom we rely to create jobs that fuel the economy. If taxes are raised on the wealthy and businesses, job creation will suffer because there will be no incentives to grow and because labor costs will be too high.

It must be said that conservatives are not dead-set against raising taxes in general—just those that target large corporations and wealthy individuals. These include increasing the federal income tax and corporate taxes (progressive, redistributive taxes), closing tax loopholes and taxing capital gains (ditto), and increasing the estate tax (which only affects the wealthiest one percent of income-earners).

However, conservatives do not oppose all taxes. After all, someone’s got to pay for America’s vast global empire. To generate government revenue, conservatives recommend instituting a regressive flat tax (disproportionately shouldered by the poor and middle class). They also do not object to increasing payroll and sales taxes (ditto).

In contrast to the received wisdom at Fox News, mainstream economists agree that investing in the poor is probably the best means of stimulating the economy. In fact, the biggest multiplier effect of federal investment is provided by food stamps, where each additional dollar invested in food stamps is estimated to put 1.73 USD back into the economy. The same goes for earned income tax credits. The investment that gives us the least bang for the buck is…wait for it…tax cuts to the wealthy. Every additional dollar in tax cuts to the wealthy (making the Bush tax cuts permanent) puts a mere 29 cents back into the economy. Which means that, rather than stimulating the economy, extending tax cuts to the wealthy would give us a negative return on our investment. The difference is due to the fact that, unlike the wealthy, poor people have to spend everything they have, so nearly all the additional investment in food stamps and earned income tax credits goes back into the economy.

But this post is not about the utility of taxes. It is about the morality of taxes.

British blowhard Stuart Varney recently had a guest on his program who advocated progressive taxation. He asked her whether she thought it was “moral” to tax the rich at a higher rate to give money to the indolent (presumably, the lower 98 percent of American income-earners).

This represents a new, and rather brazen, line of attack by the “haves” for whom the increase of a couple percentage points in the top marginal tax rate is akin to grand larceny. The argument goes something like this:

(1) Resources should not be transferred from the rich to the poor, because this only encourages laziness and an entitlement mentality among the poor;

(2) The richest (and therefore most deserving) members of society should not be asked to pay a greater share of their money to the commonwealth than the working and middle classes;

(3) It is an abuse of government power to confiscate people’s hard-earned money in redistributive transfers.

Since most American conservatives agree that the last word on morality is contained within the Bible (and particularly the New Testament), I have consulted this text by way of answering Varney’s question as to whether progressive taxation is moral.

Jesus Valued the Poor over the Rich

Jesus promised the poor that, although they suffer now, they will be rewarded in Heaven. He tells his disciples in Luke 6:20: Blessed are you who are poor, for yours is the kingdom of God.

Far from viewing the poor as bums, lay-abouts or welfare cheats (the predominant view on Fox News), Jesus preached that the poor were actually worthier than the rich. Whereas the poor would inherit the keys to God’s Kingdom, Christ famously made the opposite promise to the rich:

"it is easier for a camel to go through the eye of a needle, than for a rich man to enter the kingdom of God"(Matthew 19:24).

Was Jesus saying that the rich would not get into Heaven? Sounds that way to me. Additional clarification on the matter from the Son of God:

James 5:1-6: “ye rich men, weep and howl for your miseries that shall come upon you. Your riches are corrupted and your garments are moth-eaten. Your gold and silver is cankered; and the rust of them shall be a witness against you, and shall eat your flesh as it were fire…Ye have lived in pleasure on the earth, and been wanton; ye have nourished your hearts, as in the day of slaughter."

1 Timothy 6:9-10: "But they that will be rich fall into temptation and a snare, and into many foolish and hurtful lusts, which drown men in destruction and perdition. For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows."

Jesus Advocated Social and Economic Justice

Although Christ’s views on the rich are fairly clear, there are many in the Christian Right who apparently believe he was kidding. The proponents of “prosperity gospel” make the ludicrous claim that Jesus was actually a rich man, and that living the gospel brings riches here on earth.

Unless I completely missed the point of my Bible seminary classes, Christ’s entire ministry was about taking care of the neediest of society—helping the poor, feeding the hungry, comforting the widowed and orphaned, and healing the sick and disabled. He taught his followers to do likewise:

Corinthians 12: 25: “That there should be no schism in the body; but that the members should have the same care one for another.”

Christ is saying here that we should not simply help the poor, but strive to reduce the disparities between the rich and poor. We not only have a moral duty to help the poor, but to eliminate poverty altogether. There are those in the Christian Right, most notably Glenn Beck, who reject this notion as an implicit condemnation of the capitalist system of government and society: one should give to the poor, no doubt, but one need not make a big political thing about poverty. Beck went so far as to urge his viewers to leave any church that preached “social” or “economic justice” as purveyors of Godless Marxism.

Following Beck’s logic, God was himself a Godless Marxist, for he defended and advocated on behalf of the poor against an unjust world:

Psalms 140:12: “I know that the Lord will maintain the cause of the afflicted, and the right of the poor.”

Isaiah 25:4: “For You have been a defense for the helpless, a defense for the needy in his distress.”

Psalms 10:14: “The unfortunate commits himself to You; You have been the helper of the orphan... O Lord, You have heard the desire of the humble; You will strengthen their heart, You will incline Your ear to vindicate the orphan and the oppressed.”

It might be countered that social justice is the purview of God alone; it is He who ensures justice for the afflicted—it is not up to us to play this role.

Be that as it may, Jesus was clear about what we are responsible for during our time on Earth, and that is to rectify gross inequalities in society. He commanded the rich to liquidate their wealth and give everything to the poor; if they fail to do so, they face damnation. An oft-quoted New Testament story is as follows:

A rich man approached Jesus and asked him how he might secure eternal life. Although the man followed all of God’s commandments, Jesus told him: "there is still one thing lacking. Sell all that you own and distribute the money to the poor, and you will have treasure in heaven" (Luke 18:22).

If Christ is to be taken at his word, and Bible literalists are fairly clear on this point, then there is no such thing as an obedient Christian who is also very wealthy. Christ commanded his followers not to give a portion of their resources to the poor and needy, but to give ALL their worldly riches to the needy.

Jesus Says “Pay Your Taxes”

Conservative Christians concede that Christ taught that we should give generously to the poor (although the part about giving all one's riches to the poor was obviously an allegory), but these disbursements should be voluntary and certainly not through taxation by a secular, Godless government.

In point of fact, the Jews of the first century were faced with a similar dilemma because they opposed paying taxes to a secular, hostile Roman government. At the same time, not paying taxes would expose them to persecution by the authorities. Hoping to score points by forcing him to take a position on the matter, Jewish Pharisees came to Jesus and asked him whether it was moral to pay taxes to Caesar. Jesus replied:

“You hypocrites, why are you trying to trap me? Show me the coin used for paying the tax." They brought him a denarius, and he asked them, "Whose portrait is this? And whose inscription?" "Caesar's," they replied. Then he said to them, "Give to Caesar what is Caesar's, and to God what is God's." (Matthew 22: 15-22).

Indeed, paying one’s taxes is not only the right thing to do, but also commanded by God. Apostle Paul tells us that sovereign authorities are established by God and are therefore His intermediaries here on Earth:

Romans 13:1-7: “Everyone must submit himself to the governing authorities, for there is no authority except that which God has established. The authorities that exist have been established by God…Therefore, it is necessary to submit to the authorities, not only because of possible punishment but also because of conscience. This is also why you pay taxes, for the authorities are God's servants, who give their full time to governing. Give everyone what you owe him: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.”

We now return to the central question: Do sovereign authorities have the right to use taxes to redistribute wealth from the rich to the poor?

Let’s reason this through. If God wants us to care for one another and for the rich to give their possessions to the poor, and if the sovereign authorities on Earth are God’s intermediaries to which we are obliged to pay taxes, then it stands to reason that a progressive federal income tax (itself a very mild form of wealth redistribution) is not only legitimate, but in fact highly moral.

In fact, the Bible suggests that the government has not only the right, but the duty to tax the wealthy for the benefit of all:

1 Timothy 6:17: “Charge them that are rich in this world, that they may not be highminded, nor trust in uncertain riches, but in the living God, who giveth us richly all things to enjoy.”

In light of all of this, the better question might be whether not taxing the rich is moral.