Policy Briefs

Taxation 2003

Iowa Catholic Conference
Statement on Taxation
October 20, 2003

“Amen. I say to you, whatever you did for one of these least brothers of mine, you did for me.” Matthew 25:40.

From Biblical times to the present, the Judeo-Christian tradition has been the foundation of many legal tenets. This tradition continues today to be invoked in the context of public policy and is the basis for Catholic teaching. As Catholics, it is particularly important that we follow this tradition since it is based in Scripture and right reason, and provides a moral lens through which we view public policy. Applying Catholic social thought, with prayer and consideration to the economic issues of taxation in the State of Iowa, we find that there are two basic moral principles that should govern the collection and distribution of taxes as they benefit the State of Iowa and its people.

The principle of contributive justice, as explained in the US Bishops’ pastoral letter, Economic Justice for All (1986), suggests that all members of a society have a responsibility to contribute to the common good. A just and equitable system of taxation ensures that everyone contributes to society according to his or her ability to pay. Through contributions collected by taxes, we share the blessings that God has given us so that these resources can be used for the good of all.

The principle of distributive justice, also described in the economics’ pastoral letter, suggests that the distribution of wealth among the members of a society should first address the basic material needs of all people. As explained in the pastoral letter, the goal of distributive justice is to obtain a just and equitable distribution of income, wealth and power. This goal should be evaluated in light of how this allocation affects the poor and most vulnerable in a society.

On the basis of these moral principles, we make the following suggestions as a guide for tax policy in the State of Iowa. We understand that these applications of moral principles do not have the same moral certainty as the principles themselves and that people of good will can agree or disagree on the application of moral principles.

  1. Spending by the State of Iowa should first assure that the basic needs of all people – especially those who are poor and vulnerable – are addressed as a priority before other appropriations are made. Just as in a family’s budget, spending for recreation and entertainment should come only after paying for shelter, food, clothing and other necessities.
  2. All citizens have the right and responsibility to contribute to the common good through the payment of taxes. The collection of taxes is an important and justifiable role of government. Taxes are an individual’s contribution to the common good. In any society, the common good should be viewed of greater importance than the good of any individual or special interest group. Paying taxes is one way that citizens give something back to society.
  3. The State of Iowa should seek and maintain revenues sufficient to meet the basic needs of all, especially the poor and vulnerable. Effective stewardship of resources is always of concern to any branch of government, but even the most careful management of resources cannot overcome a fundamental lack of income. As do prudent families, the State of Iowa should maintain savings for periods when revenues are less than needed. Tax cuts, while popular, should result from a reduction in revenue needs, not as a result of providing favors for special interests.
  4. Taxation in any form should be based on one’s ability to pay. If Iowa tax policy is to remain faithful to Catholic teachings, it should first assure that the system collects taxes according to one’s ability to pay. Catholic social teaching supports a more progressive form of taxation. Our contribution to the common good should reflect our blessings. From those to whom much has been given, much should be expected. Those who make the most profit from our economic system benefit most from the structures and infrastructure that make economic enterprise possible. Tax exemptions and tax incentives should not change the fundamental requirement that taxes should be based on one’s ability to pay.
  5. All forms of taxation should be fair and just in their treatment of the poor. Taxation can be used as an economic strategy to level income distribution in a society. Systems of taxation can also grant certain advantages to those in different income brackets. Unfortunately, such advantages are often granted on the basis of power and politics rather than on moral principles. Those who are poor should not pay a disproportionate amount of income in the sum total of taxes paid. This is especially true in the case of property and sales tax, which low- and moderate-income people tend to pay in higher percentages of their total income and are therefore considered more regressive taxes. Those who are wealthier should consider their higher tax bracket as part of their Biblical obligation to tend to the “widow and the orphan”.

In conclusion, works of charity will always be a personal responsibility for Christians. But private charities cannot substitute for what the public sector can do through the just collection and distribution of tax monies. What can be done through personal responsibility of private citizens cannot substitute for the public responsibility of government to provide a safety net for poor families and vulnerable people.

It is important that all citizens reflect on these moral principles of contributive and distributive justice. We believe that contributive justice means that all citizens should contribute willingly to the system of taxation so that government can provide for the common good. We believe that distributive justice means that meeting the basic needs of its citizens should be the first priority of government.

Catholic moral teaching raises two essential questions that apply to all economic policies: 1. Does this policy maintain or enhance the life and dignity of the human person? 2. How does this policy affect the poorest and most vulnerable of our brothers and sisters? We hope that by considering these questions and applying these moral principles to issues of taxation in the State of Iowa, we will help Iowa direct its tax monies first and foremost toward the benefit of the least of our brothers and sisters in Christ.

October 2003