When Susan Pace Hamill received the first bill for her property tax after moving to Alabama, the amount was so low she thought she got a monthly assessment rather than the annual one. Conversely, her grocery receipts showed a high sales tax of 8 percent for bread and milk.
An article in her local newspaper comparing state tax rates, “Alabama’s Income Tax Least Fair,” cited the state’s low $4,600 threshold that triggered income-tax liability. To Susan Hamill, a lawyer and person of faith, the regressive sales tax and tax burden on the poor patently demonstrated the inequality and unfairness of the whole system.
Her article, “An Argument For Tax Reform Based on Judeo-Christian Ethics,” published in the Alabama Law Review sparked conservative Republican Governor Bob Riley to propose a state constitutional amendment to revolutionize tax policy in Alabama. Last September Alabamians went to the polls, but the so-called Amendment One was soundly defeated 2 to 1.
The public’s view of tax policy evolves on both the national and state levels. The Bush administration promotes tax cuts and smaller government. Besides creating huge deficits, the recent $330 billion tax cut aims to shrink government programs that foster social justice and shift social services from federal to state and local levels.
A survey probing how Alabamians voted on Amendment One revealed strong economic and ideological reasons. Curiously, voters seemingly gave less weight to religious and church opinions. For tax reform to succeed in Alabama, the survey showed, proponents must link it solidly to education. Issues of fairness, regressivity and morality proved critical for only 3 percent of the respondents.
While the reluctance of Alabama voters to change their tax structure reflects, perhaps, a suspicion about government, Catholic social teachings offer two moral principles that apply directly to taxation: the common good and preferential option for the poor. Catholic teaching rejects both statist and laissez-faire governments, affirming instead participation in appropriate government.
Last October the bishops of Iowa published 5 suggestions on taxation that incorporate the common good and an option for the poor. Their practical points will help guide Iowa voters and all people of faith across America.
1. State spending should first address as a priority the basic needs of all especially the poor and vulnerable before other appropriations are made. Unfortunately, in the past two years 34 states have cut spending on Medicaid and the State Children’s Health Insurance Program because of severe budget deficits.
2. All citizens have the right and responsibility to contribute to the common good through the payment of taxes. Paying taxes represents one way citizens give something back to society, and corporations share that obligation.
3. States should seek and maintain revenues sufficient to meet the basic needs of all, especially the poor and vulnerable. Tax cuts should result from a reduction in revenue needs, not as a political gift to special interests.
4. Taxation in any form should be based on one’s ability to pay. Catholic social teaching favors a more progressive form of taxation, not a flat tax.
5. All forms of taxation should be fair and just in their treatment of the poor. For example, no sales tax on food and essentials.
Some politicians rail against “tax and spend” proposals. But with states facing budget deficits totaling $85 billion in the coming year, and localities laying off teachers, firefighters and social workers, closing libraries and health clinics, cutting childcare and public transit, responsible citizens informed by Catholic teachings might change the mantra from “tax and spend” to “tax and mend.”
Fr. Rausch is a Glenmary priest who lives, writes and organizes in Appalachia.
(This article courtesy of the Arlington Catholic Herald.)