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.
