Moral Reflections on 21st Century Tax Policy Trends
Susan Pace Hamill
Tax policy, an important ethical issue that every voting citizen and public office holder must address, boils down to defining the amount of tax revenues needed and deciding how the burden for paying taxes should be allocated among taxpayers enjoying different levels of income and wealth. Many Americans and their elected political leaders claim Christianity in some form and, among Republicans, conservative evangelical Christianity often dominates the religious sphere. For conservative evangelical Christians, the Bible is the only authority relevant to contemporary ethical issues. This includes tax policy.
A proper interpretation and application of the Bible would first determine the broad ethical principles established for the original audience and proceed to apply those principles to “genuinely comparable situations” in modern life. However, this cannot be accomplished by merely reading English translations without studying the ancient text’s historical and cultural context. A conservative evangelical tax policy that is biblically based would not lower but actually raise tax revenues to a level adequate enough to ensure that all persons enjoy a reasonable opportunity to reach their potential. Achieving this goal requires much more than protecting everyone’s life, liberty, and private property, sometimes described as the “minimum state”. Tax revenues must adequately fund numerous other programs including education and safety nets for the most vulnerable people. Although still important, due to the presence of greed permeating the human condition, the benefice and charity championed by most churches cannot serve as a real substitute for adequate revenues raised by compulsory taxation.
Tax policy analysts describe methods for allocating the tax burden as regressive, proportional, or progressive. Regressive taxes are inversely proportional to income and wealth, and these kinds of taxes especially punish the poor and lower middle classes. For this reason, the moral principles of Judeo-Christian ethics condemn regressive taxes as a form of biblical oppression. Proportional tax models impose roughly the same tax burden as a percentage of income and wealth, while progressive tax structures increase the tax burden as the taxpayer’s income and wealth grows. I argue that the Judeo-Christian teachings on wealth require the tax burden to be moderately progressive. This is because proportional and mildly progressive models enormously favor the wealthiest taxpayers over those in the middle and upper middle classes. Community-oriented secular moral theories and those grounded in other faiths reach similar tax policy conclusions, albeit for different reasons.
It is important to recognize that Judeo-Christian moral principles do not pinpoint the exact measurement of the level of tax revenues necessary to ensure reasonable opportunity, or the details that would precisely define the moderately progressive model for allocating the tax burden. Instead, in striking a balance between the common good and the right to enjoy private property within reason, these principles provide general guidelines to steer the moral conversation during the debate. These general guidelines require that political leaders and others with power to influence tax policy must first ask whether the wealthiest and upper middle-class taxpayers are paying their fair share of taxes. If tax cuts benefiting wealthy and upper middle-class taxpayers are being contemplated, this obligation becomes even stronger: Judeo-Christian teachings are much more suspicious of wealth than they are protective of private property, and those enjoying higher levels of income and wealth tend to fight for the smallest tax burden possible. Although reasonable people adhering to Judeo-Christian values will disagree on the specifics, if the moral conversation during the debate genuinely reflects these values, then the tax policy ultimately adopted has the best chance of achieving a morally acceptable result.
Although all states are different, when taken together, the nation’s state and local tax policy paints a grossly immoral picture. The most recent study conducted by the Institute on Taxation and Policy found that “forty-five states have regressive tax systems that exacerbate income inequality,” while none of the remaining five states allocate their tax burden in a manner that even approaches a moderately progressive model (139). Overall K-12 funding in many parts of the nation is inadequate, especially in high poverty districts. The funding is not even close to what vulnerable children would need to have a meaningful chance to improve their lives.
Currently, our nation’s state and local tax policy reflects objectivist ethics values. Objectivist ethics, which sees each person acting in their own long-term rational self-interest as the only avenue to reach moral correctness, views individual effort as the source of all wealth. It also values above all other considerations the autonomous rights of each person to benefit from their efforts in the free market. Values stemming from an objectivist ethics view taxation as a violation of individual autonomy, and therefore attempt to limit government functions to the minimum and strongly oppose even a hint of progressivity. In addition to sharply conflicting with community-oriented secular values, objectivist ethics is “dead on arrival” for any Christian, or for any person claiming to adhere to a religious faith. This is because objectivist ethics is a form of atheism where everyone becomes their own god and, like all other forms of idolatry, leaves no place for God as the ultimate concern.
Twenty-first century federal tax policy trends have mostly proceeded in the wrong direction. In 2000, when George W. Bush was elected to his first term as President of the United States, the budget surplus was well over $200 billion – the largest in history. The individual income tax, which raises the lion’s share of federal revenues, was moderately progressive. The estate tax only reached the wealthiest Americans, applying to just over two percent of all estates. President Bush’s first-term tax cuts reduced income tax and capital gains rates and eroded the progressivity of the federal tax burden. Although President Bush’s relentless efforts to eliminate the estate tax failed, his first-term tax cuts reduced the estates subject to the tax. The budget surplus rapidly evaporated into a string of substantial deficits. By the time President Bush left office, the national debt had grown to well over one trillion dollars.
Despite public professions of his faith, President Bush received no rigorous moral scrutiny for his tax cuts, as would be required by Judeo-Christian ethical principles. He brushed off concerns that these tax cuts would benefit the wealthiest Americans and camouflaged objectivist ethics values with the discredited theory of supply-side economics. His goal to eliminate estate taxes, which would have led to unchecked accumulations of family fortunes in the billions of dollars, conclusively violated Judeo-Christian moral principles in that some extremes of wealth accumulation are in themselves unjust under any circumstances. Simultaneously, his callous indifference to the threat posed by federal deficits to the programs uplifting poor and middle-class Americans violated the Judeo-Christian moral principle of requiring adequate tax revenues in support of reasonable opportunity.
During his first presidential campaign, Barack Obama promised to reduce the income tax burden on lower- and middle-income taxpayers, while raising income taxes on upper middle class and wealthy taxpayers. He also stated that the estate tax should not be further eroded. A severe economic crisis and Republican control over the House of Representatives after the midterm elections complicated his first term agenda, but during his second term he partially achieved his income tax goals and to some degree restored the progressivity of the federal tax structure. By the time President Obama left office, the federal deficit picture had materially improved. Although compromises with Republicans further reduced the estate tax, President Obama’s moral reasoning veered away from objectivist ethics and inched towards the moral principles of Judeo-Christian ethics and community-oriented secular values.
On December 22, 2017, President Donald J. Trump signed the Tax Cuts and Jobs Act of 2017, which became effective on January 1, 2018. The initial goals of President Trump and key Republican leaders to repeal the estate tax were just as immoral as President Bush’s efforts in the early 2000s. The legislation, which more than doubled the estate tax exemptions, conclusively violated the moral principles of Judeo-Christian ethics and community-oriented secular values. The exemptions were already quite generous; no heightened moral scrutiny occurred; and the flat forty percent rate, still in effect today, fails to distinguish between estates worth millions, hundreds of millions, and those worth billions of dollars. The Tax Cuts and Jobs Act also cut income tax rates at higher income levels and made several other changes criticized as primarily benefiting the wealthiest Americans. Moreover, projections warn that, if left unchanged, this legislation will cause out-of-control federal deficits that will threaten the nation’s fiscal stability.
Like President Bush, President Trump and his advisors invoked the discredited theory of supply-side economics. They also exaggerated the scope of middle-class tax relief, downplayed the primary benefits to the wealthiest Americans, and disregarded uncontrolled deficits and fiscal instability. The justifications and the effects of the Tax Cuts and Jobs Act are void of even a shred of Judeo-Christian or community-oriented ethical values. The focus on reducing that disguise the primary benefits to wealthier Americans, with the same callous fiscal irresponsibility reminiscent of the Bush tax cuts era, squarely reflects objectivist ethics values.
President Trump’s statements and actions have earned him the dubious distinction of being, at best, the most reckless and morally bankrupt president in recent memory. Unlike President Bush, who became a “born-again again believer” more than twenty years before his first presidential campaign, President Trump never openly claimed to be a Christian until he decided to run for president. Despite the obvious political expediency of his recent conversion and his glaring character defects, many of Trump’s staunchest supporters, even during his failed reelection campaign, were evangelical and other Christians. This Faustian Bargain is beyond shameful and is a terrible witness for the church. The fact that so many Christians gave in to the sin of idolatry by blindly following such a repugnant person is a sign that the Christian religion as a viable and authentic conviction with a principled moral compass is in deep trouble.
President Joe Biden’s first-term tax policy proposals, which include increasing taxes on the wealthiest Americans, expanding safety nets, and combating tax evasion perpetuated by the wealthiest Americans and corporations, may steer the country away from the worst features of the objectivist-ethics-influenced tax policy of the Bush and Trump years. However, the increased polarization between the political parties and the insatiable desire of too many Republicans to minimize the federal tax burden of the wealthiest Americans creates a real risk that President Biden’s efforts will fail to materially curtail the objectivist ethics values that have dominated federal tax policy since the early 2000s. The future direction of federal tax policy will define the character of the nation: Will the nation get back on track towards preserving basic safety nets and enhancing reasonable opportunity for all? Or will the nation succumb to objectivist ethics and, in the words of tax policy scholar Michael Graetz, “become two Americas: one quite well-to-do, the other impoverished [like] Brazil” (282)?
Given that most Americans claim Christianity or Judaism in some form, why does objectivist ethics continue to be a stumbling block? My research for the article this essay is based on shows that the conclusion I reached almost twenty years ago is still true. Christianity has become obsessed with low-sacrifice decoys covering up the message that real faith demands high sacrifice.
Tax scholars and tax experts, the “keepers of the keys,” have heightened moral obligations to reveal the truth about this complicated and easily misrepresented area protecting the public good. Lamenting the shallow tax policy discourse in Republican circles, scholar David Cay Johnston, who has ties to the Republican party, passionately insists that conservative principles mandate that “those who gain the most from a society have a moral duty to bear the greatest burden of maintaining that society” (8-9). He then warns, “Without a principled tax system America will wither…. Let us work to ensure as best we can that students will never read a history text that begins with the words ‘The United States of America was…’”.
The biblical message also sternly warns that if objectivist ethics driven tax policy continues and worsens, the nation will decline and eventually fail. Conservative evangelical Republican political and religious leaders, guilty of relentlessly pushing tax policy that is diametrically opposite of genuine faith-based values, have a moral obligation to “turn from evil and do good” by supporting tax policy that requires higher personal sacrifice from their largest campaign and church donors, as well as from themselves. They should start by supporting at least some of President Joe Biden’s proposals.
The Book of Deuteronomy offers a particularly direct, personal, and chilling prophecy if these conservative evangelical Republicans, and our nation in general, fail to repent and heed this warning: Be careful that you do not forget the Lord your God, failing to observe his commands, his laws, and decrees…. Otherwise… when you build fine houses and settle down…and all you have is multiplied, then your heart will become proud…. You may say to yourself, “My power and the strength of my hands have produced this wealth for me.” But remember the Lord your God…gives you the ability to produce wealth, and so confirms his covenant …. If you ever forget the Lord your God … I testify against you … that you will surely be destroyed. ♦
Susan Pace Hamill is a professor of law at the University of Alabama School of Law and a professor at the University of Alabama’s Honors College. Her scholarship evaluating tax policy under the moral principles of Judeo-Christian ethics has received national and international press coverage including a front-page story in the Wall Street Journal as well as feature stories in the New York Times, Washington Post, and the London Times. This essay is based on her most recent law review article, to be published in Volume 52 of the Cumberland Law Review.
Hamill, Susan Pace. “Moral Reflections on 21st Century Tax Policy Trends.” Canopy Forum, November 18, 2021. https://canopyforum.org/2021/11/18/moral-reflections-on-21st-century-tax-policy-trends/.