Some Taxing Principles

October 16, 2012

Quite a while back I wrote a post on taxes and if there was any guidance on the subject in the Bible.  I have combined most of that post into this one so I apologize if I get a bit repetitive. While there is no direct command that “we shall use this tax system”, I think there is significant guidance in the Bible for us to utilize when developing tax policy.  Especially when you look at the Bible as a whole, which we are supposed to do.  Taxes are not a subject that brings smiles to the faces of the people that have to pay them…it always is a hot topic.  Too often it is a political tool used by politicians to try to emotionalize something that should be looked at with data and logic.  As I mentioned before…discussions on taxes are used by the Left to try to pit one class of people against another.  They emphasize the fairness of a tax system that is anything but fair.  I will attempt to tackle this subject as I did before while throwing in some examples that show that progressives such as Obama are taking the wrong approach to taxation.

Should We Pay Taxes at all

I do not think there are a lot of people that believe that the government should not tax the people at all.  Governments need some type of revenue stream to carry out their purpose of promoting good and punishing evil outlined in the Bible.  Jesus endorsed the idea that it is moral to pay taxes to a civil government in Matt 22:17-21 when he told the Pharisees “Therefore render to Caesar the things that are Caesar’s, and to God the things that are God’s.”  Paul re-iterated this idea in Rom 13:6-7 when he said, “For the same reason you also pay taxes, for the authorities are ministers of God, attending to this very thing.  Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed.”  So this answer is easy.  Yes, the Bible supports paying taxes to a civil government to the effect that nothing is immoral about a government requiring them.  Obviously both political parties agree with this idea.

Should Taxes Be High or Low

Everyone thinks taxes should be low…for themselves…evidently not necessarily for others though.  This is where politicians on the Left try to get the old tired game of class warfare going.  Low taxes for you middle class guys, but those greedy filthy rich guys need to pay their fair share (reads your share as well).  This is the idea of demonizing wealth, but we have already discussed that wealth in itself is not immoral.  If I were to get technical right now I would say that we need to follow the Laffer curve.  This curve, which has been proven valid twice in my lifetime (Reagan, Bush), and once before I was born (JFK), says that by lowering taxes (to a point) you actually create more revenue for the government.  So data says tax rates should be lower rather than higher.  This helps the general welfare of the population (of all statuses) while also helping the government raise more revenue for the defense of its people and to help those truly in need.  You will come to the same conclusion though by just using some Biblical principles on economics.  The morality of wealth, economic fairness,  and the concept of private property all play a role here, but another idea that I have not covered is also important.  It is the idea of individual liberty. The Bible is a big proponent of it.  Here are a few verses for reference:

From an economic standpoint, what does individual liberty mean?  It relates to how you choose to spend the money you earn.  If you earn $100 and get to choose how you want to spend the entire amount, then you have full liberty with regards to that money.  If the government takes $35 of that $100 (35% – current tax rate for high earners), then you have just lost $35 of liberty.  As discussed above, it is ok for civil governments to ask for some tax revenue, but the less of it the better.  And that means everyone.  If we are going to have a just government, we cannot single out a group of people simply because they have more wealth.  The Bible speaks against that. These verses and those I have offered before support this notion.  Progressives to include the current administration do not believe in this philosophy.  Here is a chart explaining the higher taxes that will go into effect next year.   Here is another chart showing the hidden taxes in Obamacare.   And here is a series of articles on this administrations tax policy.  Numbers simply do not lie…despite their rhetoric, these taxes affect everyone, not just the wealthy.  Not to mention that their tactics of targeting the wealthy is immoral by itself.  While their intentions may be good, their approach is not affirmed by the Bible in any way.

What Type of Tax System

Like I mentioned before, everyone thinks THEIR taxes should be low, but not necessarily any one else’s.  The current tax system in the United States is very progressive meaning the more money you earn, the higher your tax rate is.  If you make up to a little over $8,000 you pay a 10% tax rate, but any amount you earn over about $373,000 you get to pay a tax rate of 35%.  That is what the Left calls fair and they would like to make it even more fair.  The question is does the Bible support this kind of progressive tax structure.  I do not believe it does.  I believe that the Bible is more supportive of some type of flat tax reform.  Here is how I come to this conclusion:

There is the obvious example of tithing that is further supported with other Biblical principles. In the Old Testament the Israelites were required to tithe 10% of their earnings to support the Levites, which essentially you could think of as their governing body, although they were essentially a theocracy at this time. (Deut 14:22-23; Lev 27:30-32 among many others).  This was a flat rate for every citizen, rich or poor.  It is also the true definition of fair.  As a simplified example, you can compare two people.  The first person earns $20,000 a year, the second $200,000.  If the tax rate was indeed 10%, person A would pay $2,000 in taxes while person B would pay $20,000 in taxes.  So the relatively rich guy pays 10 times the amount of taxes as the poor guy, but it is still fair because the rate is the same.  Taking this into consideration I believe that some form of Flat Tax would be Biblically supported.  That does not necessarily mean that the tax rate should be set exactly at 10%, but rather we should use God’s system as a pattern for what we do.

Another Biblical principle that sticks out to me is that we are supposed to be impartial in our judgments.  A couple of verses always come to mind when I think of this with regards to taxes.  I have mentioned them before but here they are again:

“To impose a fine on a righteous man is not good, nor to strike the noble for their uprightness” (Proverbs 17:26)

“You shall do no injustice in court. You shall not be partial to the poor or defer to the great, but in righteousness shall you judge your neighbor.” (Lev 19:15)

I think the key point in all of this is that we should not demonize a group of people just because they are successful financially, which is something that politicians often do.  If a person makes a fortune, and have done it legally according to our laws, then they deserve to keep these earnings just as much as any other person. We should be impartial, and the government should as well, without regard to whether a person is rich or poor.  As Proverbs 17:26 says, they should also not impose a fine on a righteous man (which over taxation could be considered) just because of his wealth.  This leads directly to another Biblical principle that should be the root of all policy positions .  The purpose of civil government itself.

I did a standalone post on this topic so I apologize for the repetitiveness.  It is important though. The purpose of civil government according to the Bible is to promote good and punish evil (1 Peter 2:14).  In this case, when the government decides to impose additional taxes on a particular group of people simply based on the fact that they have been good stewards with what God has given them, they are doing something that directly contradicts the God given purpose of civil government.  It is essentially punishing good habits and rewarding bad ones.  So in the end, the Bible does not really support our current progressive style tax system and we would be better off if we more closely followed the Bible’s example…to me that means some type of flat tax system. Many in both parties support this progressive system, but those in the Democratic Party support making our tax policy even more progressive.  The fact that Democrats want to tax the rich even more than they are now is not disputed.   It should come as no surprise at Obama’s pre-election plans would have brought tax rates back to Jimmy Carter levels  …and we all know how well that worked…it did the opposite of worked. Luckily more reasonable minds have kept that from becoming a complete reality. Going to something more resembling a flat tax could take some transition, but Mitt Romney has been more open to the idea than he has in the past.

Should Everyone Pay Taxes

Here is a good one.  Because of our progressive tax system, the tax rate may be 10% for the lowest bracket but because of various exemptions many people do not pay any taxes whatsoever…some actually get extra money from the government.  So should everyone have to pay something…wouldn’t that be fair?  Check out the following verses:

“Each one who is numbered in the census shall give this: half a shekel according to the shekel of the sanctuary, half a shekel as an offering to the LORD.  Everyone who is numbered in the census, from twenty years old and upward, shall give the LORD’s offering.  The rich shall not give more, and the poor shall not give less, than the half shekel, when you give the LORD’s offering to make atonement for your lives” (Exodus 30:13-15)

So yes, I believe, and the Bible supports the notion that every citizen should pay at least something in the form of taxes.  We have the example in Exodus that I just mentioned, but there are also other principals involved.

Over the last 80 years the federal government has been grabbing more and more power from the people of the United States, reducing our liberty significantly.  Our government has gotten so big that it now spends much more money each year than it receives in tax revenue.  Our current debt stands around $16 trillion (notice if you read my initial post on taxes that the debt has gone up over 2 trillion dollars since then).  Much of this money is spent on entitlement programs and kickbacks which is why progressives have been accused (rightfully so) of creating a welfare state.  So why is there no accountability to the people?  Why do many people not seem to care?  One reason is that some suffer from ULS (Utopia Logic Syndrome) that prevents people from using logic and reason to solve problems because they believe in a world that does not exist (and yes I just made that up). Another major reason is that over half the taxable population pays no taxes at all.  So if the government wants to expand entitlements beyond its means over half the population may not care because it is not their money.  If everyone has to pay something, even if it a small amount, more people would be vested in what the government is doing.  And it is only fair that everyone contribute in some way to the society that they live in…not to mention the self worth built by knowing you are doing so.  This whole idea goes back to a government principle that is supported by the Bible – Separation of Powers.  Here are a few verses:

In our government we often think of the separation of powers with reference to the three branches of government, but leaders being accountable to the people is also a check on power.  When you lose accountability due to a powerful bureaucracy or through a taxation policy (both of which are now true for us), then you will begin to see major problems (power corrupts).  I think the concept of everyone paying some tax would be beneficial to society and the Bible does support this idea.  But I have not really seen any action from either side on this particular point.  All the discussion is usually on the other side of the spectrum.  This is just my two cents.

Taxes on Corporations

A purpose of government is to promote good, which in one sense can mean the overall welfare of its citizens.  Within this government has certain responsibilities to take care of the poor, but this is not limited to just welfare.  That is the next post. One way to really help the poor long term is to help them become self-sustaining.  It is not only a matter of physical welfare so they can take care of themselves and their family, but also a matter of self dignity and worth.  The government’s role in this should be fairly easy…maintain a positive environment for business so they can create the jobs that are necessary to bring people out of the cycle of poverty.  Being friendly to business means that you should try to keep tax rates lower and allow these businesses to keep as much earnings as possible.  This allows them to hire more employees, give better benefits, and re-invest in their business.

Instead of doing this, Obama, like the progressives before him, have instead tried to demonize corporations just as they attempt to do with wealthy individuals. Today the United States has the highest corporate tax rate in the world.    Or if you like charts better.  It is no wonder that jobs are being shipped to other countries.  Our government is making us uncompetitive.  If you look at the chart you will find that this problem did not start with Obama, but at the same time lowering taxes for big business is not something he believes in as proven by his policy recommendations.  He even specifically targets industries he does not agree with, which is unethical in itself.   The people within the Democratic Party seem to agree.   Keep in mind that these are national delegates to the DNC convention. This is a prime example of how liberal policies that are intended to raise money to redistribute wealth to the poor actually hurt those very people. It hurts two ways.  First, if a company is forced to pay higher taxes, they do not have the money to grow…therefore they do not have the money to hire new employees.  Secondly, higher taxes are usually just passed on to consumers through higher prices.  So no new jobs and higher priced goods.  Not a good formula to help those in need. So the real question for those who hold progressive ideas on corporate taxation is this…What do you hold as a higher priority; helping those in need or punishing those who you deem are too wealthy?

Taxes on Capital Gains

A very similar question holds true for taxes on capital gains.  Taxes on capital gains discourages investment, which in turn slows economic growth so it has the same effect has corporate taxation.  In addition to this, there once again is the issue of property.  Who does it belong to…government, society, or the individual?  The Bible supports the idea of property belonging to the individual.  These two ideas alone would give support to limiting or completely abolishing this tax.  But there is also the idea of impartiality that has already been discussed.  Politicians have specifically targeted raising this tax out of fairness because they are once again attempting to target the wealthy.   Some try to hide this fact, but Obama was very straightforward in his rationale…he was going after the wealthy out of supposed fairness.

The Death Tax

The final tax I wanted to touch on is the death tax.  This is another tax that I believe should be abolished.  But does the Bible think so?  Here are some verses that cover inheritance:

“A good man leaves an inheritance to his children’s children” (Proverbs 13:22)

“House and wealth are inherited from fathers, but a prudent wife is from the Lord” (Proverbs 19:14)

“If a man dies and has no son, then you shall transfer his inheritance to his daughter.  And if he has no daughter, then you shall give his inheritance to his brothers.  And if he has no brothers, then you shall give his inheritance to his father’s brothers.  And if his father has no brothers, then you shall give his inheritance to the nearest kinsman of his clan, and he shall possess it.  And it shall be for the people of Israel a statute and rule, as the LORD commanded Moses.” (Numbers 27:8-11)

The one thing missing from these verses is the government being involved in any way whatsoever in handing down inheritance to ones relatives.  That is something you will not find anywhere in the Bible.  You will find the opposite though.  Here is an example:

“The prince shall not take any of the inheritance of the people, thrusting them out of their property.  He shall give his sons their inheritance out of his own property, so that none of my people shall be scattered from his property” (Ezekiel 46:18)

This verse specifically says that the government should not take any inheritance from the people.  The verse also holds another interesting truth.  It says “so that none of my people shall be scattered from his property”.  It is interesting because that is the real life consequence of this tax policy.  It is well documented that this tax often forces children to sell family businesses and farms because they do not have the liquid funds to pay for the tax.  Ironically for progressives this policy benefits the large entities that they love to bash so much.

The idea of property once again makes its appearance here (as should be no surprise since the capitalist system which is Biblically supported is based upon this principle).  The only way the death tax could be supported Biblically would be if it viewed property as belonging to the state or to society.  We all know by now that it does not.

So that is my spill on taxes.  I have left out a whole lot of practical arguments and probably some Biblical ones as well, but hopefully it is still beneficial to you.  I will leave you with a couple of thoughts.  First, the government is currently looking for any opportunity possible to raise more revenue for the government.  But what is the purpose of this.  Is it really to help those in need or pay for our defense?  More than likely your money could being used for some other wasteful endeavor such as these.  Or to benefit another friend of the administration.  A second takeaway is this…Obama and his tax policy are not exactly in line with Biblical teaching.  As Christians make their decision on who to vote for, this fact should not be brushed aside as inconsequential.

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