Wednesday, November 11, 2009

Tax Policy and Justice

The late Monsignor Edward Ryle, a Catholic priest, has an interesting commentary about tax policy and justice.

Msgr. Ryle reminds us that the goods of the earth are meant for all people. The Catholic Church, despite its staunch opposition to anything that smacks of socialism, does in fact teach that the right to private property is not absolute. Private property is essentially under a "social mortgage", as the late Pope John Paul II said; it serves a higher, social function. One of the documents promulgated at Vatican II said that "The right to have a share of earthly goods sufficient for oneself and one's family belongs to everyone." High degrees of inequality in the distribution of income and wealth are intrinsically unjust.

Lastly, government is the entity that is charged with seeking and assuring the common good of a nation state. Governments need to levy taxes to do that. They are to be guided by the principle of distributive justice and proportionality - the poor are to receive more in benefits, the rich are to be taxed more. The Catholics teach that while taxes can't be "confiscatory", there is a moral obligation for individuals to pay taxes. Furthermore, Ryle quotes the theologian Bernard Haring:

There is not only the sin of tax-evasion by trying to escape tax payment; there is frequently the greater injustice of blocking proper legislation through powerful pressure groups and through cooperation in these sins because of individual and group selfishness.

The most abominable tax crimes are committed by members of the legislating bodies who, for personal benefits, back the already over-privileged groups to the detriment of the less-privileged and of the welfare of all.


In the Virginia governor's election, Bob McDonnell, the Republican candidate, ran against Creigh Deeds, a moderate Democrat. Virginia is doing pretty well as a state, but the roads need improvement. Traffic congestion, especially in Northern Virginia, is a big problem. Deeds mostly swore that he would not raise taxes - except he said he might raise gasoline taxes, which was not really raising income taxes. McDonnell swore straight up that he would not raise taxes at all. Both candidates swore that they would fix the roads.

McDonnell won. Personally, I regard this as unfortunate. I joked to my friends that there was no way he could fix the roads "unless he cuts Medicare. Wait, I meant Medicaid. Then again, he'd probably cut Medicare if he could." (Medicare cannot be cut by any state legislation, although Medicaid certainly can.) Perhaps that was uncharitable of me. But as I blogged earlier, Virginia's government runs quite efficiently. There is no pot of money that will magically appear to fix the state's roads. The governor and legislator will need to raise taxes or cut other programs - it's that simple. Today's Republican party is completely against raising taxes - even Arnold Schwarzenegger, a moderate Republican, swore he would not raise taxes to solve the worst state budget crisis in the whole country. Governor Donald Carcieri, the Republican governor of Rhode Island, has sworn to cut business taxes and has made moves to cut social services.

The Urban-Brookings Tax Policy Center shows that US taxes take about 27% of the country's GDP - 9% lower than the mean among OECD countries (i.e. mainly Western European countries). In other words, there is room to raise taxes. I am not saying that we can or should pay for our needs solely by taxing the rich - in fact, I've cited evidence to the opposite in the past. What I am saying is that a dogmatic aversion to raising taxes on those who can afford it and funding programs that serve the needs of the poor and the broader community is poor theology and bad policy.

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