The Christian attitude toward taxes is set in the New Testament. Jesus said, “Give Caesar what is Caesar’s, and give God what is God’s.” Paul wrote to the Romans, “If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.” Christians living in a democracy can do more, though, than pay what they owe. They can advise their leaders on the topic of taxation, they can choose their leaders according to their statements about taxation, and they can speak and write to shape public opinion about taxation.
Taxes are part of the social contract between government and its citizens. Citizens surrender some property to the government in the form of taxes, and the government provides benefits for its citizens in exchange for that property. Benefits can include armed forces to protect the nation from attack and police forces to protect communities from crime. Using tax dollars, governments build and maintain roads, finance schools, and provide parks, museums, libraries, and community centers. Tax dollars maintain the judicial system in which criminals are prosecuted and (if found guilty) punished and by which two parties can settle their differences without resorting to physical attacks on one another.
Taxes can take many forms. In a head tax, every person pays the same amount. In a flat tax, every person pays the same percentage of his or her income. In a graduated tax, wealthy people pay a larger percentage of their income and poor people pay a small percentage (and some of them pay no income tax). Tolls are collected from people as they use highways or bridges. Import fees and export fees can be charged on products when they cross borders. Sales taxes can be assessed when products are bought and sold. Fees for licenses to own a car or a gun or a pet are taxes. Money paid for a marriage license or a fishing license is a tax. Landowners pay taxes on their land. Investors pay taxes on their profits. Even money won through gambling is taxed.
Governments assess taxes for several reasons. The most obvious reason is, of course, to gather money for government services. However, taxes can be used to discourage some kinds of behavior and to encourage other kinds of behavior. Taxes on tobacco and on alcohol discourage people from smoking and from drinking. Taxes on gasoline might motivate drivers to drive less or to purchase more efficient vehicles. On the other hand, capital gains are taxed at a lower rate to encourage people with extra money to invest in businesses that provide jobs. Property taxes on industrial land frequently are reduced or eliminated when a city or state wants to encourage companies to build new facilities that will provide jobs.
Taxes sometimes have unintended consequences. Some years ago a state wanted to raise more money to cover unemployment benefits, and it wanted to raise that money by taxing only wealthy people. For that reason, the state government enacted a special sales tax on luxury yachts. To avoid paying that tax, the wealthy people in that state decided not to buy new luxury yachts. Because yachts were not being bought, the yacht manufacturing companies had to lay off workers. Instead of raising money to cover unemployment benefits, the state’s yacht tax only increased unemployment.
An increase in the gasoline tax causes an increase in the price of a loaf of bread. Farmers need gasoline to operate their machinery when they plant the seeds and when they harvest the grain. Then the grain must be driven to the mill, and the flour must be driven from the mill to the bakery, and the bread must be driven from the bakery to the store. No one in this chain of production is willing to pay more for fuel while receiving the same amount of money for their work. The cost gets passed along the line until it reaches the man or woman who is buying the loaf of bread. By the same token, other taxes on products and the producers of products only raise prices in the stores. Governments that tax the factory owner may think that they are taxing the wealthy, but they are only driving up prices for all people, including the poor.
Many citizens would like to pay less money for taxes. To achieve that, they have to be willing to have the government provide fewer benefits to its citizens. Other people want the government to do more for its citizens. They have to be willing to pay higher taxes. Any request to have the government do more to help one group of people while asking another group to pay for the service with higher taxes misses the point. People pay taxes willingly only when they know they are getting something for their money. Again, this is part of the social contract.
On its own, a tax is neither good nor bad. It just is. The value of a tax comes from the government’s ability to use tax dollars to provide citizens with the services they want. Politicians who want to be elected sometimes promise to cut taxes without reducing popular services. Others promise to provide more services without raising taxes. They rarely keep these promises if they are elected. Sometimes politicians who have been elected threaten to cut funding for popular programs (or actually do cut that funding) until citizens object, funding is restored, and taxes are not reduced. If I were running for office, I would never make a promise I couldn’t keep. If I were elected, I would be responsible with your tax dollars; I would not play tricks with them or waste your money. J.