Catholics, the Tea Party and tax reform

The Tea Party came to DC last Thursday, in time for tax day. Coincidentally, yesterday's Gospel had the risen Lord meet the apostles for breakfast on the Sea of Tiberius with the command to Peter to feed my lambs, tend my sheep and feed my sheep. Most homilies focus on how this was the opporunity given to Peter to make up for denying Jesus on Good Friday, but given the role popes have played in advocating for the poor - especially over the last century and a half and including the current one - there seem to be deeper meanings. Pope Benedict is no slacker in advocating for the social gospel. Indeed, his encyclical Caritas in Veritate stands as quite a stark contrast to the Tea Party movement's latest focus on the injustice of leaving the poorest untaxed.

The issue of everyone paying taxes is key to those who support a Flat Tax, who desire totally proportional taxation with everyone paying the same rate. The Fair Tax is a varient of this, even with VAT offsets, since the rate charged prior to offsets is equal to everyone. This view is important to people who believe in equality in process rather than equality of result. Indeed, they believe equality of result rewards sloth and breaks down a sense of community sacrifice. Dick Armey is an extreme believer in this view - and not just because his funders also hold it.This view is not uncommon in society. It's existence is why I propose a VAT along with a shift of wage taxes from individuals to an expanded business income tax. Making such taxes visible promotes at least some shared sense of sacrfice.

The desire for shared sacrifice also leads to the use of per capita debt statistics - even though such statistics are entirely inappropriate given our tax system. The real liability for the national debt is exactly the same as the liability for the payment of tax. They are one and the same, since the ability of a nation to borrow rests solely on its ability to tax. If anything, the national debt liability should reflect the distribution of wealth, which is much more skewed to the top than either the distribution of income or the distribution of taxation. Since wealth is harder to tax than income (even by an LVT - because of the liquidity problem), what each individual owes is a function of the amount of taxes owed (see line 60 of Form 1040) less the additional credits on later lines. This total, times 9 (which is roughly the ratio of federal income taxes to national debt) gives each individual what they really owe. My family ended up owing roughly $5,500. Our share of the debt (aside from taxes owed) is roughly $50,000. Most Tea Party activists pay more in taxes. Given my analysis of how that relates to their liability for the debt, one can easily see why they wish to spead the pain. The tax changes I propose would essentially further limit the liability for the debt to the wealthy who pay an income surtax - however I would limit the surtax to debt repayment, interest payments and the payment for overseas deployments. Once such deployments are ended and the debt repaid, the reason for the tax would cease - as would the tax itself.

The other egalitarian feature I wish to emphasize is my proposed expanded child tax credit, which would be an offset to business income taxes and paid to workers as a component of wages. This would replace other family entitlements and is necessary on justice and efficiency grounds because small employers of low wage workers cannot afford to pay a living wage (which for me as a Catholic intellectual is non-negotiable doctrine) if mandated without some kind of tax support. Lacking tax support would either drive small firms into bankruptcy or result in business size exclusions that defeat the purpose of living wage mandates.

Of all the issues we face as Catholics, I believe the issue of justice for families is the one we should focus on most. If we get this one right, the problems of abortion and health care go away. Neither party really deals with this issue well - which is why we must either continue to prod them or look somewhere else.