Taxation

The origin of the Christian pro-capitalism position is grounded on divine authority and the belief that God is the owner of earth, and therefore, has the right to give it to whom He wills, without any interference on the part of those who would attempt to usurp and replace Him with either themselves or their economic theories. (See Leviticus 25:23 and Luke 16:12.)

1) Neither Jesus, nor properly interpreted scriptural texts, supports the socialist form of economic systems. There is no doubt, however, that modern day progressives in both major political parties in America, who have been called “the religious left,” according to the Wall Street Journal, “looks to the federal welfare and regulatory state as the source of secular salvation.” (Source: The Watchmen Report: July 27, 2006)

Jesus was opposed to socialism and wealth redistribution concepts according to His teaching in Matthew 13:12. The Apostle Paul echoed that sentiment in 2 Thessalonians 3:10, and his letter to Timothy expressly opposed the concept of socialism. (See 1 Timothy 5:9-13.) Clearly, socialism is the attempt of civil government to REPLACE the spiritual government of the church, who has the ministry of reconciliation (See 2 Corinthians 5:18.) with government handouts like welfare, social security, “free” healthcare, “free “prescription drugs, etc.

Three things must take place for flaws of American socialism to be remedied: 1) If Christian believers would, at a minimum, tithe to their local churches, the “spiritual government” of the church could alleviate the pressures of these issues from the quagmire of failed government welfare policies. 2) If current opinions and laws that hinder the cooperation between church and state were returned to the inarguable intentions of the founding fathers for that relationship, faith-based operations could flourish without unnecessary, and quite often, bigoted, anti-Christian opposition. (For a more in-depth study on this subject, see the PeaceMakers Institute’s Treatise on Capitalism available on this web-site.) 3) Church leadership must return to an accurate and lawful execution of the doctrines of corporate peace (church discipline). For example, a bridge out of socialism that would facilitate a return to proper, Biblical aid for the poor, could begin with a simple partnership where the civil government permanently removes a citizen from welfare as soon as a local church authority enrolled them into church jurisdiction. The church would then be required to Biblically administer social aid to him or her under strict qualifications outlined by Scripture.

2) Jesus taught AGAINST the concept of a “capital gains tax” in Luke 19:12-27 and Matthew 25:14-30. Stephen Moore, the director of fiscal policy studies at the Cato Institute, in conjunction with John Silvia, chief economist at Kemper Financial Services in Chicago, Illinois, upon completing a thorough analysis of this particular tax, published, “[The] capital gains tax is so economically inefficient–because of its punitive effect on entrepreneurship, thrift, and investment–that the optimal economic policy for the United States would be to abolish the tax entirely.” The CATO Institute further explains that there are three reasons capital should matter to the typical American worker: 1) Capital represents the modern tools that Americans work with on the job. 2) Capital formation makes the average American worker more productive. 3) Improvements in worker productivity lead to higher real wages and improvements in working conditions.

“The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital… the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.”- President John F. Kennedy, 1963

“You’re looking at a poor man who thinks the capital gains tax [cut] is the best thing that could happen to this country, because that’s when the work will come back. People say capital gains are for the rich, but I’ve never been hired by a poor man.” – New Jersey painting contractor

Moore and Silva continue, “A capital gain is income derived from the sale of an investment. A capital investment can be a home, a farm, a ranch, a family business, or a work of art, for instance. In most years, slightly less than half of taxable capital gains are realized on the sale of corporate stock. The capital gain is the difference between the money received from selling the asset and the price paid for it.

“Capital gains” tax is really a misnomer. It would be more appropriate to call it the “capital formation” tax. It is a tax penalty imposed on productivity, investment, and capital accumulation.

For all the controversy surrounding the tax treatment of capital gains, that tax brings in surprisingly little revenue for the federal government. In the 1990s, capital gains tax collections have amounted to between $25 billion and $30 billion a year… capital gains taxes are just 6 percent of personal and corporate income tax receipts and just 3 percent of total federal revenues. Even if the capital gains tax[es] were abolished entirely, and there were no offsetting receipts, the federal government would still collect 97 percent of its total tax receipts each year.”

Over the past few decades, in opposition to a biblical worldview on this issue, both the Democratic and Republican parties have promoted the capital gains tax, directly or indirectly, believing that reducing (much less – eliminating) the tax would “only benefit the rich.” One can only hope that the folksy simplicity, demonstrated in the comment of the aforementioned New Jersey painting contractor might someday reveal itself to the minds of today’s Democratic Party – a party much different than the one espoused by President John F. Kennedy back in 1963. One might also fairly ask our Democratic and Republican representatives in Washington, “Do you really think you’re smarter than Jesus?”

In agreement with the Judeo-Christian perspective on this issue, conservative Christians with a Bible-based worldview have been a consistent proponent of both reducing and eventually eliminating this oppressive tax.

3) Proverbs 13:22 says: “A good man leaveth an inheritance to his children’s children: and the wealth of the sinner is laid up for the just.” It is my understanding that the present tax code allows the federal government to steal as high as 80 percent of an inheritance by the time it reaches your grandchildren. This inheritance tax is immoral, and Christians should use their influence to end its abusive practice.

4) According to Levitical case law, the Bible supports a “Capital Tax System” which is to say that everyone should be taxed THE SAME percentage. The Democratic and Republican parties over the last few decades have come to agree, however, in opposition to an accurate biblical world view, and have both promoted a “progressive tax system” that takes from those who have made success and “redistributes” that wealth to those who have not. This is a socialist practice of wealth re-distribution which usurps the proper jurisdiction of the local church, as expressed in point 1. (See above.) In other words, “Robin Hood”, as well-meaning as he might seem, will be in trouble with God for nothing short of theft when he passes from death to life.

5) Jesus was opposed to the concept of a “minimum wage” according to His teachings in Matthew 20:1-15. This particular teaching of Jesus makes union membership (another concept introduced to the American free-markets through socialist influence) for obedient Christians both an impossibility and a contradiction of one’s faith in Christ. Historically speaking, unlike the Republicans, the Democratic Party has a well-known affinity with America’s labor unions.

With these points clearly articulated, consider the following written by Director of Consultation for the Ontario Tax Commission, Patricia Lane:

“If the only two things of which we can be sure are death and taxes, we might want to spend as much time and thought thinking about the latter as we do the former! Yet, while the Old Testament contains some references to the payment of tributes and Christ talks a little about appropriate attitudes to tax reform, it is very difficult to find modern writers who help us develop a deeper understanding of discussions about taxation. Engaging in thoughtful dialogue is made still more challenging because, despite the pervasiveness of taxation in everyday life, no area of public policy is more veiled from public understanding. The debate is focused on two issues: paying taxes and spending tax revenue.

People resent paying taxes they perceive as unfair. In the literature of public finance, tax fairness has a very specific meaning, referring to the distribution of the burden of taxes among individuals. For the public, tax fairness is a multidimensional concept reflected in different ways in the tax system and in discussions of tax policy. Tax fairness encompasses the nature of what is taxed—property, sales, income or profit—overall levels of taxes, the individual’s ability to pay, the question of exempting some from paying for reasons other than ability to pay (such as religious freedom or encouraging job creation) and the relative amounts of the tax burden we share with our neighbors.

People also raise questions of fairness when they see money raised from taxes being spent in ways with which they disagree. Our differences can be deeply philosophical, such as whether or not people should pay taxes when government intends to use the money for the purchase or use of arms. Others question whether those who do not benefit from a service such as education should be forced to pay for it. Still others ask if those (such as cigarette smokers) whose behavior means that they are more likely to require the use of a costly service (such as health care) should be required to pay for that service to allow those who alter their behavior (by refraining from smoking) to pay less. Others advocate the imposition of special taxes (such as green taxes) to be earmarked to resolve special problems (such as environmental degradation).

These questions become more and more pertinent as times get tougher. When paychecks are shrinking, people are much more conscious of the amount that comes off the top in taxes and more concerned about how that money is spent by governments. At the same time, decision-makers perceive that they face constantly increasing needs for services. The so-called experts in this field are often unable to talk about the issues without resorting to jargon. The vast majority of us who are trying to understand how best to balance issues of our own well-being and conscience with the real needs of others for support find we are unable to effectively participate in the debate unless we resort to oversimplification and add to the existing polarization. Tempers flare. Laws are passed in the heat of the moment, which create problems later. Communities are divided. People go without services they need because of perceived abuses by others.

What are appropriate answers to the issues surrounding taxes? What questions could we be asking to provide helpful leadership in this often divisive and sometimes destructive debate? Are there any “right” answers? What lessons was Christ trying to teach when he taught on the subject? Does the Old Testament provide any guidelines for contemporary policy?

When Joseph began his rule over Egypt, he wisely set aside food from the years that yielded good crops for the famine years that followed. There is still a broad public consensus that the common good is served by setting aside provisions for a rainy day. But, as in biblical times, the consensus breaks down when people do not agree on the amount, the uses to which it is put and the degree to which they are consulted. One of the important factors that allowed Moses to persuade the Jews that they should leave Egypt was their resentment over taxation. When Bostonians expressed their resentment about taxation without representation by throwing boxes of tea into the harbor and declaring their independence from England, they were following in an age-old tradition (Genesis 41:34; Exodus 1:11; Deut. 14:22-27)!

The Old Testament endorses rulers collecting taxes to prevent uprisings by providing services and anticipating future needs. Its stories also remind us that when rulers do not provide satisfactory explanations for taxation or fail to redistribute tax revenue in ways that are perceived to be fair, people will object, sometimes at great cost to both parties. It seems a lesson that the Judeo-Christian world is destined to learn over and over again (Genesis 49:15; Neh. 5:1-5).

Another theme is people signifying their subjection to a ruler through the payment of taxes or conversely signifying their independence by refusing to pay (Deut. 18:1-5; 2 Samuel 8:6; Ezra 4:13; see Civil Disobedience). These stories and teachings formed the foundation of thinking about taxation for those who encountered Jesus and his followers.

There are two passages in which Jesus focuses on taxes. The first concerns the Pharisees’ query about paying taxes to Caesar (Matthew 22:17-22). Some argue that this is a firm instruction to pay taxes no matter how distasteful. At first glance it could be taken to be such a statement, especially when it is combined with the following excerpt from Paul’s statement about paying taxes in his letter to the Romans: “That is also why you pay taxes, because the authorities are working for God when they fulfill their duties. Pay, then, what you owe them; pay them your personal and property taxes, and show respect and honor for them all” (Romans 13:6-7 TEV). In Christ’s time Jews hated paying taxes to the Romans for many reasons. They disliked paying in Roman coin because it meant they had to trade in the oppressor’s currency in order to have the money to pay. They hated the symbolism of being forced to pay for the economic and military might that kept them subjugated. They resented that they did not have complete autonomy over their own communities. Their religious leaders taught that the empire was immoral and ungodly. Tax collectors were reviled as collaborators with the enemy. Income and other state taxes combined with religious and community taxes were heavy—about 40 percent of their income. In this context, these teachings seem firm indeed!

But might there not be other interpretations? Is it conceivable that Jesus was teaching the importance of strategic thinking? Might he be arguing that taxation is not symbolic of anything unless we choose to make it so? In the past much trouble had been caused by those who confused the payment of taxes with moral or spiritual obeisance. Perhaps Jesus reminds us that we can allow government to take our tax payments without giving it any authority over the realm that must be governed by our relationship with God. To refuse to pay taxes in his time would have been seen as sedition. Paul might have been reminding us of the importance Christ placed on picking our battles wisely.

The second passage (Matthew 17:24-26) concerns the official query about paying the temple tax. This also speaks of strategy. Jesus is reminding us that we can make the payment of taxes into an issue or not as we choose. Whenever we have discerned real choices, God will provide the resources with which to carry them out. “Ask and it will be given to you” (Matthew 7:7) applies to this instance as well.

If we accept that we do have a choice about whether to pay taxes, what principles should guide us as Christians in modern debates about tax policy? Jesus taught us several lessons here. He did not confront Peter in front of the tax collectors but waited until they were alone. He began with a quiet, affirming question—one to which he knew Peter would know the answer. His question assumed the right of common people to engage in discussion about tax policy and their capacity to do so thoughtfully. Finally, he asked Peter to find the resources to pay the tax without hardship and by doing what he did best—fishing.”

(Source: Bible Background Commentary, article taken from Ontario Government’s Fair Tax Commission, Fair Taxation in a Changing World (Toronto: University of Toronto Press, 1993)).