Tax benefit

April 1, 2011

Paying taxes in this country is ordinarily accompanied by much grumbling. Rarely does anyone point out that paying taxes is not just a legal duty but a moral opportunity—because paying taxes is one way each of us supports the common good. Taxation provides crucial elements of a good society, including a justice system, public education, an infrastructure that encourages commerce, and a safety net for the elderly and the vulnerable.

As Gary Dorrien points out in this issue, tax rates in this country have mostly gone down since the 1980s. Political candidates rush to pledge that they will lower taxes, or at least not raise them—as if that is necessarily better for the country. But while tax rates have been going down, the income level of most Americans has stagnated and the income of the wealthy has sharply increased. The economic crisis of the middle class has many contributing factors, including the decrease in well-paying manufacturing jobs, but increasingly regressive tax rates have put new stresses on the middle class while helping many of the rich get richer.

Meanwhile, many corporations escape taxes altogether. Reuters news agency reports that 72 percent of all foreign companies doing business in the U.S. and 57 percent of American companies paid no federal income taxes during at least one year between 1998 and 2005. During the same period, more than half of the foreign companies and 42 percent of American companies paid no taxes for two or more years. In those years, corporate sales in the U.S. totaled $2.5 trillion. Though U.S. business leaders complain about high taxation rates, the amount they actually pay is relatively low given the proliferation of tax credits and loopholes and efforts to move operations overseas. In recent years, for instance, General Electric, Exxon-Mobil, the Bank of America and Citibank paid no income taxes.

When asked in a survey to pick the ideal distribution of wealth in a country, Americans, both rich and poor, favored a pattern that is closer to egalitarian Sweden than to the reality of the United States. Americans seem unaware of the economic inequality that exists in this country—which is perhaps one reason they aren't clamoring for different policies.

As Dorrien suggests, Americans are more comfortable talking about the good life than the common good. And the definition of the good life tends to be one of individual consumption, dependent on foreign fossil fuel and protected by military might.

In Journey to the Common Good, Walter Brueggemann says that the Bible's vision of the common good is of a society in which the poor are not taken advantage of, in which strangers are welcomed and in which people stand in solidarity with one another. Applying this vision to contemporary conditions is a prophetic vocation to which people of faith and conscience are called. Even when that means defending taxes.


churches escaping taxes

If we really feel this way, shouldn't we be organizing an effort to remove non-profit status from our churches? If we are to be good stewards and support the many good efforts done by government social services, shouldn't we be financially supporting them directly, as everyone else has to?

churches escaping taxes for good reasons

In fact, the reason why churches have been granted non-profit status, along with other agencies such as the Red Cross, Boy Scouts, and local libraries, is that such entities do in fact provide many of the social services that government does not provide, and even more so now that certain political parties push for reductions in support of government efforts to help the poor and elderly. It is the churches and other non-profit entities that create support systems for those in need. It is in churches and other non-profit groups that soup kitchens, food pantries, day care, after-school programs, and activity centers for seniors are springing up for the use of low income and the elderly in our neighborhoods. In addition, our members who provide financial support for these programs are also paying their taxes and providing support for our government as well.

Churches paying taxes

Isn't the church made up of "everyone else"? I would hope that as "The Church" is the arms, hands and feet of Jesus that we are supporting the communities we are in and doing so more efficient than government is right now.

taxes for the common good?

It might be unnecessary to point this out, but the "common good" is not how and has never been a goal of the anti-tax movement in this country. The most prominent gathering in that movement, the Tea Party, is named after a revolt not by citizens protesting "taxation without representation", or even higher taxes on the tea that they threw overboard into Boston Harbor. It was instead a revolt of Boston merchants who were about to lose money on the Dutch tea they had in stock when the British legislature lowered taxes on exported British tea. It is just one more example of how to find immorality in a society, "follow the money".

Letter from Dave Wise

A  bi-vocational pastor of 15 years, I am blessed to own my own business, which has allowed me to pursue my real passion--the ministry. So it was with great interest that I read your editorial “Tax benefit” (April 19). Like you, I am very concerned by the disparity between the “haves” and the “have-nots.” I agree that many Ameri­cans are unaware of this disparity, and in that lies the problem.

However, I resist your conclusion that much of this disparity is caused by large corporations not paying taxes and the notion that the dilemma could be solved by them doing so. The truth of the matter is that corporations do not pay taxes, never have and never will. The consumer of the products or services pays the corporate taxes through higher prices. If a corporation is taxed a certain amount, it will always raise prices to compensate for it. That higher cost is paid by you and me.

I hope you will look at this issue from both sides and not jump to the conclusion that corporations are the real problem in the poverty cycle. 

Dave Wise

Indianapolis, Ind.

Wise Letter, Dave!

Exactly so! And when corporations are taxed, their owners are really taxed twice, as they pay taxes on dividends and capital gains. And in taxing corporations, we reduce their available investment capital, thereby reducing potential gains in productivity.

And what do private businesses exist for? Yes, profit, but in the long run, profit is realized by pursuit of the common good--at least common enough that customers will buy the goods or services in sufficient numbers to provide a profit. Not all businesses contribute to the common good, but is it arguable that all government programs contribute to the common good?

As to income equality, raising taxes might lower the incomes of the well off, but it seldom improves the lot of the less well off. The well off respond to taxes by modifying their economic behavior--moving money into (less economically productive) tax shelters or simply leaving the country that taxes them for some low-tax haven. Beggar thy neighbor has never been a path to equality.

In fact, tax revenues tend to rise as economic activity rises, often stimulated by permanently lowering tax rates. If we're pursuing revenue rather than income equality with tax rates, we won't raise them precipitously on the wealthy.

It's time for Christians to take responsibility for the macroeconomic implications of the public-policy positions that they advocate. If you understand the economics and really care about the poor, you'll care about such matters differently than this article suggests.

Thanks, Dave, for pursuing godly ends in both your vocations!