Take Action on Tax Fairness and Justice
Visit the KY General Annual Assembly with the Kentucky Council of Churches
Click here to learn more about how the KCC is making
it easy for you to learn about important issues and about your
opportunity to attend special forums at the KY Capitol. The session
that will be held Februray 2, 2005 at 9:30am will include a Bible
study on tax fairness with Dr. Jerry Sumney of Lexington Theological
Seminary and a chance to discuss these issues with legislators.
Click here
for more info.
You might also wish to attend a Frankfort rally of the KY Economic
Justice Alliance (KEJA) in Frankfort on Thursday, Feb. 3rd. Citizen
lobbyists will meet in the Capital Annex Cafeteria at 9 am. At
11 am, KEJA will host a press conference to release their two
legislative proposals: income tax reform and corporate tax reform.
For more details, contact Heather Roe Mahoney at 859-276-0563
or hroe@kydrc.org or Lisa Abbott at 859-985-7480 or labbott@kih.net.
Principles
for Fair and Just Taxation
A Policy Paper for the Kentucky Council of Churches' Commission
on Justice Ministries
The Social Context in 2004
The Commonwealth of Kentucky, along with virtually every other
state government in these United States, has faced increasing
financial difficulties over the past few years. The economic crisis
and inadequate revenues have combined to force difficult budget
choices which have resulted in cuts to programs and services to
all Kentuckians, but which have fallen most heavily upon those
already struggling against poverty, health factors, job loss,
and inadequate education to find new opportunities for themselves
and their families. Our lives as citizens in this Commonwealth
have been further complicated by the partisan political stand-off
in our state legislature that has prevented the adoption of a
budget by the General Assembly over the two biennial budget cycles
of 2002 and 2004.
Numerous government-sponsored study commissions have stated that
Kentucky's system of generating tax revenues is woefully inadequate
for present needs; that it is unjust, taxing Kentucky's already
poor population at one of the two highest rates in the nation;
and that it must be modernized or reformed. At the same time,
the (so-called) "Taxpayer Protection Pledge" campaign
among Kentucky legislators has prevented both the public and the
legislators from taking fresh and imaginative looks at the Commonwealth's
system of generating revenue. This pledge for "no new taxes"
does not protect taxpayers in the long run, but places greater
and greater burdens on individual tax payers and on those least
able to pay because of its effect of inhibiting any real tax modernization.
The current Governor of the Commonwealth has recommended a tax
modernization plan that includes a variation of a national effort
known as TABOR, the Taxpayers Bill of Rights. Governor Ernie Fletcher
has proposed a plan in which there is a "trigger" mechanism
that mandates both revenue and spending limits. The revenue limit
would lower income tax rates every time growth in revenue is projected
to be higher than a factor based on a ratio of growth in the population
plus inflation. In a time when the Commonwealth's treasury is
already projecting deficits, this "trigger mechanism"
would not enable the state to catch up and develop adequate "rainy
day" reserves. The fundamental aim of such a program is the
diminishment and reduction of government. Rather than representative
democracy, such reductions in government lead inevitably to a
less equitable style of governance in which services and programs
are voted on in referenda by the people, rather than by their
elected representatives.
Oliver Wendell Holmes once stated that "taxes are the price
we pay for a civilized society." In order for a civilized
society to thrive, taxes at all levels of government must be sufficient
to meet the legitimate needs of the population, especially the
modern equivalents of the Biblical widows and orphans.
It has become common for Americans to complain that they are "being
taxed to death." In reality, however, when looked at from
an international perspective, we learn that the overall tax burden
in the United States falls well below the average for the world's
developed countries. In these industrialized nations, taken together,
taxes account for almost 37% of the total economy; in the United
States, the comparable figure is just under 30%. Too many leaders
have portrayed taxes as the cause of societal problems-including
the struggles of the middle class to stay afloat economically.
Too few leaders have advocated a tax system that is adequate for
government and its programs and services, and that will be just
and equitable to all citizens and all businesses.
Tax policy has tremendous potential to divide communities. The
debate about taxes centers around how much money we get to keep
for ourselves and how much we are expected to contribute to the
common wealth of the society. As citizens, we have a moral obligation
to assure that the money from the shared treasury is spent efficiently
and for the common good, not for the privileged few.
Theological Foundations for Our Convictions
The Kentucky Council of Churches has been an advocate for justice,
especially justice for the poor, throughout its history, as have
our member communions and congregations in their much longer histories.
In a policy statement adopted by the 44th Annual Assembly, in
October, 1991, the Council affirmed its conviction that God intends
justice in human affairs. This conviction was grounded in the
testimony of Scripture, particularly the witness of the prophets
and Jesus. [cf. "A Call for Justice", adopted by the
44th Annual Assembly, October 11-12, 1991] The indivisible commandment
of Jesus to love God with all our being and to love our neighbors
as ourselves constitutes the basis of all the Council's work and
advocacy in the public arena.
That same policy statement on justice articulated the resolve
of the Council to support programs and policies, both in church
and in government, that:
· recognize the mutual responsibility of all people, both
as individuals and as groups, for each other;
· promote participation in the opportunities and responsibilities
of citizens in our society;
· provide support and resources adequate for basic life
necessities;
· promote opportunities for the poor to escape their limited
choices; and
· encourage all citizens to examine how existing social
structures maintain injustice.
The Bible and Taxes
While the Bible does not give us explicit direction on the issues
of tax policy, neither is it silent on matters of taxation. Several
familiar biblical stories are actually about taxation:
· Almost overlooked in the story of Joseph and his "coat
of many colors" is that the heart of Joseph's proposal for
preparing Egypt for the coming years of famine was a 20% tax on
the produce of the land (Genesis 41). It was this tax-generated
produce which carried the Egyptians through the "lean"
years.
· Gleaning was established in the Israelites' law (Leviticus
19:9-10) as a way for those who owned the capital of that day
(i.e., land) to care for the poor and destitute. Those with agricultural
produce were not to harvest all of it; rather some was left so
that those in need could help themselves.
· The story of Jesus which ends in the familiar "Render
to Caesar the things that are Caesar's…" arose when
Jesus was asked whether the Jewish people should pay taxes to
Rome (Mark 12:13-17). His answer seems to approve of those taxes,
while recognizing that there are also things that belong to God.
And the story of Zacchaeus (Luke 19:1-10) indicates that taxes
could be exorbitantly or fraudulently high.
Principles of Just Taxation
· The Kentucky Council of Churches
affirms its belief that representative democracy and a just and
equitable system of taxation provide citizens with an important
means of fulfilling the call of God to care for our neighbors,
and especially the widow, the orphan, the sick, and the oppressed.
With respect to tax policy Catholic/Christian social teaching
understands the principle of social justice to include both contributive
and distributive justice. Contributive justice suggests that all
members of a society have a responsibility to contribute to the
common good. Through contributions collected by taxes, we share
the blessings that God has given us so that these resources may
be used for the good of all. The collection of taxes should be
just, so that those with greater means should pay more of their
income in taxes than those with less means
· Secondly, distributive justice includes these components:
· The distribution of wealth should first address the basic
material needs of all people for food, shelter, health care, and
opportunity for personal and economic growth.
· The revenues generated should be substantial enough to
meet the needs and the objectives of the citizens as expressed
through representative government. The challenge of providing
a fair distribution of resources tests the moral strength of a
society and serves as a crucial indicator of how well we maintain
and regulate the inevitable struggle for justice and power. When
we fail to respond to the cry of the poor and do not address the
excesses of the privileged and powerful, we undermine the foundations
of democracy and of justice in our society. Third, we affirm that
Kentucky's current tax system is outdated, inefficient, unjust,
and inequitable, both in its collection and in its distribution.
We urge our legislators to set aside their fears of constituent
retaliation regarding some prior commitment by the legislator
to a pledge of "no new taxes." We urge our legislators,
instead, to make a positive affirmation for, and to act swiftly
to create, a modern and just tax revenue system for the Commonwealth
of Kentucky. A sound revenue system for state government needs
to be
· efficient, that is, easy to collect and calculate;
· stable;
· able to grow with the economy;
· and sufficient to meet the important needs of educating
our children, caring for our most vulnerable and needy neighbors,
and maintaining the public good;
· one that will ensure the public welfare, by helping stimulate
environmentally sound and socially just economic growth.
· Fourth, Kentucky needs to target tax relief for those
who need it most:
· for low-income working families through removal of the
heavy level of taxation on the poor under current law, and
· by the creation of a state Earned Income Tax Credit.
Fifteen states have adopted state EITCs based on the federal EITC
credit. The federal credit lifts more people out of poverty than
any other program except Social Security.
· Fifth, tax loopholes that have created exemptions that
may or may not have been appropriate in a particular time, but
which grant special privileges not granted equitably to all, need
to be closed. Businesses must pay their fair-share of the costs
of government, which include maintenance of the public infrastructures,
public education, health services, and public safety.
· Sixth, the Kentucky Council of Churches advocates for
a just and equitable tax system that will not have negative effects
on family life and on the poor.
· Sales taxes are often more politically popular than income
taxes or property taxes, because they are only collected by small
amounts at a time, and the perception is that "everybody
pays them." Yet the fact is that sales taxes only on goods
results in the low income people paying a larger proportion of
their income than higher-income people. This is called "regressive
taxation." The Kentucky sales tax should be applied to services
as well as to goods, especially in an economy based more on services
than on the production of material goods. As food and medicine
are exempted from the sales tax, so medical services should be
the only exemption from the sales tax on services.
· Revenue generated by taxing gambling, and by authorizing
the expansion of gambling, will not solve Kentucky's fiscal plight,
but may, instead, make it worse. We do not see any state with
commercial gambling whose fiscal situation is healthy. Academic
economics professors in published, peer-reviewed research, have
shown that the cost to society is about twice the revenue generated
for the state. Expanded gambling is not worth the cost of the
damaged lives of families, businesses, and the social fabric in
general.
Conclusion:
The Kentucky Council of Churches has confidence in the democratic
legislative process in our Commonwealth to manage our tax policy
in a morally responsible manner. We support the democratic process
with the expectation that its deliberations will serve the common
good with a special commitment to aiding and protecting the most
vulnerable of our neighbors. When taxes are fairly determined
and regulated, they will create a more stable and compassionate
society, one that assures the possibility that all of us may live
in peace and may be able to fulfill our human potential while
enjoying the benefits of our life together.
Resources for this Statement
Catholic Conference of Kentucky. Principles
for Just Taxation, adopted by the
Roman Catholic Bishops of Kentucky, February 2004.
Web-site: www.ccky.org
Iowa Catholic Conference. Statement on Taxation. October, 2003.
Web-site: www.iowacatholicconference.org
Maine Council of Churches. Principles for Fair Taxation, adopted
February, 2003.
Web-site: www.mainecouncilofchurches.org
Missouri Catholic Conference. MCC Public Policy Committee's Recommendations
Concerning the FY 2004 State Budget. February, 2003
Web-site: www.mocatholic.org
North Carolina Council of Churches. Tax Justice: A Policy Statement
Adopted by
the House of Delegates, November 9, 2000.
Web-site: www.nccouncilofchurches.org
North Carolina Council of Churches. Remembering the Common Good
in Times of
Financial Crisis: A Policy Statement adopted by the House of Delegates,
November 12, 2002.
Web-site: www.nccouncilofchurches.org
Discussion Questions:
1. What aspects of our national life and life in the state of
Kentucky need to be financed by government? Brainstorm a list
of what government now finances as a beginning step in discussing
this question.
2. Should all people be required to contribute something to the
common good? If so, what kinds of contributions are appropriate?
Are taxes the only way to contribute? What other contributions
might be mandatory?
3. Should contributions be "progressive"; that is, based
on the ability to contribute?
4. Do you agree with the principle of distributive justice? If
so, why? If not, why not?
5. Should the state care for those unable or unwilling to support
themselves? What happens when the weak and vulnerable are not
supported? Who is responsible?
6. How does the Great Commandment that we love God with all our
heart, mind, soul, and strength, and our neighbor as ourselves,
apply to the issue of tax justice?
7. What would be the most just means for a society to provide
the services required for a healthy nation or state? Are "voluntary"
taxes on gambling, tobacco, and alcohol, "just"? How?
Should the state promote gambling so that it can harvest the taxes
on it at a much higher rate than on any other product or business,
and thereby avoid raising income taxes, property taxes, or sales
taxes?
8. Would you support a sales tax on all "services" except
medical services? In an economy based more on services than on
consumption of goods, what justifies the continued exclusion of
services from the sales tax?