Return of the Prodigal Son by Pompeo Batoni - 1773

Evolution for the Catholic Student

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Monday, April 23, 2012

Is a Progressive Income Tax Just?

Is a Progressive Income Tax Just?

          Before I begin I want to say that I like Dave Ramsey and loathe class warfare.  I say that because I don’t want anyone to think my intent is to insult the former or laud the latter.  It was a conversation I heard on the Dave Ramsey Show last week that spurred my consideration of this topic.

          For those not familiar with Mr. Ramsey, he is a best-selling author and host of a radio show on which he gives financial advice to people, predominantly focused on getting out of debt.  He is also a Christian, which is something he makes no secret of on his show or in his books.  The discussion the other day was on the progressive income tax.  A couple of callers called in trying to explain to Mr. Ramsey why they supported it, as he apparently did not.

          Before I go further I should also point out that I heard about 20 minutes of a three-hour show, so my commentary is certainly not on Mr. Ramsey who, as I said, I like.  But it got me thinking about the progressive income tax, which I support, and the reasons I would give for doing so.

          Now, as a Catholic, I don’t want my politics to be labeled simply “liberal” or “conservative.”  I do my best to let my Faith define my political beliefs regardless of where that means they will fall.  Now, given the current political climate, it’s true that I most often fall in the category labeled “conservative,” but the progressive income tax would be an exception (though both our political parties have tended to support it, at least in practice).

          I also need to point out that I do not believe my position to be the “Catholic position.”  It is the one I have come to, informed by my Faith, but people can disagree with my conclusions completely without being any less faithful to Catholic teaching.

          Now that all the disclaimers are out of the way…I began thinking last week as I was listening to the radio about how I would explain my support of a progressive income tax to Mr. Ramsey if I had the time to call in, particularly knowing he would be open to arguments based on Christian principles.

          The first question for me is whether taxation is a proper function of government.  The government often does things, with good ends in mind, that are not its proper function.  I oppose those actions, and am firmly a limited government man.  However, taxation is universally a function of government, and always has been in this country (though one could argue whether we ought to have a federal income tax at all, since for more than half our history we did not).

          Government should not overstep its bounds, but I believe the functions it does perform should take into account the principles of Catholic social justice, in this case I think particularly of the preferential option for the poor.  Is it just to tax the wealthy at a higher rate than the poor?  I believe it is, because if the government is going to levy taxes, it should do so in a way that gives preference to the poor.

          Now the tax rates on the rich should not be unreasonable, and I am not arguing that they currently don’t pay enough, only that a progressive tax code is not unjust.  I am also aware that overtaxing job producers and investors in the economy is counter-productive and hurts everyone, rich and poor alike.

          Mr. Ramsey made the familiar point that when you look at the percentage of federal income tax revenue that comes from the richest five percent of people, it far exceeds the percent of the country’s wealth they actually earn.  And 49 percent of people pay no federal income tax.  Some have used this statistic to claim that half the country is not poor, yet they pay no taxes.  This, however, misses one incredibly important point – social security tax.

          When I do my taxes and see my total annual income, I’m not sure whether to laugh or cry.  To be honest I pay very little federal income tax.  But social security kills me.  And since social security is only collected up to a certain income level, it taxes the poor at a higher rate than that five percent spoken of earlier.  (Please don’t accuse me of being an Occupier; that’s not my point.)

          I’ve heard people say that these are two different taxes and need to be considered separately, but that’s silly.  The money comes out of my paycheck and I don’t see it.  Whether that money goes to the federal government as social security tax or federal income tax doesn’t matter one bit to my paycheck.  Talking about how much federal income tax a group pays is a straw man.  You must include social security and then talk about someone’s tax rate.  (State taxes, however, are different since they vary more due to where you live rather than income and are not collected by the federal government.)

          What’s my point in all this?  I am not complaining or calling for anyone to pay more taxes.  We have an election coming up, but with babies being killed by the thousands every day, marriage under attack, and religious liberties being liquidated by executive order, tax policy is largely irrelevant.  However, it is never futile to examine our political beliefs in light of our Faith.