Sunday, February 5, 2012

The Bible on Taxes


Whenever there is a discussion on the economy, taxes are always a hot topic.  It is a political tool used by politicians to try to emotionalize something that should be looked at with data and logic.  Discussions on taxes are used by the Left to try to pit one class of people against another.  They emphasize the fairness of a tax system that is anything but fair.  I think there are many lessons that we can gain from studying the Bible and what it says about taxation.  The great thing I always find is that when you follow the Bible’s teachings there is almost always a positive practicality about it…of course God designed it that way.   There are many different topics to cover in this field so I will try to break it down the best I can.

Should We Pay Taxes at all

I do not think there are a lot of people that believe that the government should not tax the people at all.  Governments need some type of revenue stream to carry out their purpose of promoting good and punishing evil outlined in the Bible.  Jesus endorsed the idea that it is right to pay taxes to a civil government in Matt 22:17-21 when he told the Pharisees “Therefore render to Caesar the things that are Caesar’s, and to God the things that are God’s.”  Paul re-iterated this idea in Rom 13:6-7 when he said, “For the same reason you also pay taxes, for the authorities are ministers of God, attending to this very thing.  Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed.”  So this answer is easy.  Yes, the Bible supports paying taxes to a civil government.

Should Taxes Be High or Low

Everyone thinks taxes should be low…for themselves…evidently not necessarily for others though.  This is where politicians on the Left try to get the old tired game of class warfare going.  Low taxes for you middle class guys, but those greedy filthy rich guys need to pay their fair share (reads your share as well).  If I were to get technical right now I would say that we need to follow the Laffer curve.  This curve, which has been proven valid twice in my lifetime, says that by lowering taxes (to a point) you actually create more revenue for the government.  So data says tax rates should be lower rather than higher.  Here is where the Biblical practicality I talked about comes into play…you will come to the same conclusion by using Biblical principles on economics.

The first principle is individual liberty.  The Bible is a big proponent of it.  Here are a few verses:
  • Freedom of Choice (Gen 2:16-17; Deut 30:19; Josh 24:15; Matt 11:28; Rev 22:17)
  • Slavery is viewed negatively in the Bible (Exod 20:2)
  • Loss of liberty was used as judgment (Deut 28:28-33; Judg 2:16-23)
  • The Jubilee year seen in a positive light (Lev 25:10)
From an economic standpoint, what does individual liberty mean?  It relates to how you choose to spend the money you earn.  If you earn $100 and get to choose how you want to spend the entire amount, then you have full liberty with regards to that money.  If the government takes $35 of that $100 (35% – current tax rate for high earners), then you have just lost $35 of liberty.  As discussed above, it is ok for civil governments to ask for some tax revenue, but the less of it the better.

The second principle is property.  The Bible supports private ownership of property, which includes the money you earn.  Here are a few verses:
  • The law against coveting and stealing another individual’s property (Exod 20:15-17)
  • Punishments for stealing or damaging another person’s property (Exod 21:28-36; 22:1-15; Deut 22:1-4; 23:24-25; 19:14)
  • Warning from Samuel on what a powerful government would do to their property (1 Sam 8:10-18)
  • Private ownership provides opportunities to test what is in our hearts and opportunities to give thanks to God (Col 3:15; 1 Tim 6:17)
So if the Bible believes in private ownership of property, which would include the money you earn, then it would support lower rather than higher taxes.  Speaking of earnings, the Bible also directly addresses this issue as well.

“The laborer deserves his wages” (Luke 10:7)

“He who plants and he who waters are one, and each will receive his wages according to his labor” (1 Cor 3:8, a reference to heavenly reward)

“Well done, good servant! Because you have been faithful in a very little, you shall have authority over ten cities” (Luke 19:17)

These verses reinforce the notion that what people earn belongs to them so the government should only take what is absolutely necessary to carry out its God given purpose.

What Type of Tax System

Like I mentioned before, everyone thinks THEIR taxes should be low, but not necessarily any one else’s.  The current tax system in the United States is very progressive meaning the more money you earn, the higher your tax rate is.  If you make up to a little over $8,000 you pay a 10% tax rate, but any amount you earn over about $373,000 you get to pay a tax rate of 35%.  That is what the Left calls fair and they would like to make it even more fair.  The question is does the Bible support this kind of progressive tax structure.  The answer is no, it does not.  There is the obvious example of tithing that is further supported with other Biblical principles.

In the Old Testament the Israelites were required to tithe 10% of their earnings to support the Levites, which essentially you could think of as their governing body. (Deut 14:22-23; Lev 27:30-32 among many others). 

This was a flat rate for every citizen, rich or poor.  It is also the true definition of fair.  As a simplified example, you can compare two people.  The first person earns $20,000 a year, the second $200,000.  If the tax rate was indeed 10%, person A would pay $2,000 in taxes while person B would pay $20,000 in taxes.  So the relatively rich guy pays 10 times the amount of taxes as the poor guy, but it is still fair because the rate is the same.  Taking this into consideration I believe that some form of Flat Tax would be Biblically supported.  That does not necessarily mean that the tax rate should be set exactly at 10%, but rather we should use God’s system as a pattern for what we do.

Another Biblical principle that sticks out to me is that we are supposed to be impartial in our judgments.  A couple of verses always come to mind when I think of this with regards to taxes.  Here they are:

“To impose a fine on a righteous man is not good, nor to strike the noble for their uprightness” (Prov 17:26)

“You shall do no injustice in court. You shall not be partial to the poor or defer to the great, but in righteousness shall you judge your neighbor.” (Lev 19:15)

I think the key point in all of this is that we should not demonize a group of people just because they are successful financially, which is something that politicians often do.  If a person makes a fortune, and have done it legally according to our laws, then they deserve to keep these earnings just as much as any other person…just as the Bible says in the verses on earnings I mentioned above.  We should be impartial, and the government should as well, without regard to whether a person is rich or poor.  As Proverbs 17:26 says, they should also not impose a fine on a righteous man (which over taxation could be considered) just because of his wealth.  This leads directly to another Biblical principle.  The purpose of civil government itself.

I mention this often, but the purpose of civil government according to the Bible is to promote good and punish evil (1 Peter 2:14).  In this case, when the government decides to impose additional taxes on a particular group of people simply based on the fact that they have been good stewards with what God has given them, they are doing something that directly contradicts the God given purpose of civil government.  It is essentially punishing good habits and rewarding bad ones.  If you think money itself is evil then maybe I should write another post on that particular topic…remember the Bible says that the love of money is the root of all evil, not money itself.

So in the end, the Bible does not really support our current progressive tax system and we would be better off if we more closely followed the Bible’s example…to me that means some type of flat tax system.

Should Everyone Pay Taxes

Here is a good one.  Because of our progressive tax system, the tax rate may be 10% for the lowest bracket but because of various exemptions many people do not pay any taxes whatsoever…some actually get extra money from the government.  So should everyone have to pay something…wouldn’t that be fair?  Check out the following verses:

“Each one who is numbered in the census shall give this: half a shekel according to the shekel of the sanctuary, half a shekel as an offering to the LORD.  Everyone who is numbered in the census, from twenty years old and upward, shall give the LORD’s offering.  The rich shall not give more, and the poor shall not give less, than the half shekel, when you give the LORD’s offering to make atonement for your lives” (Exod 30:13-15)

So yes, I believe, and the Bible supports the notion that every citizen should pay at least something in the form of taxes.  We have the example in Exodus that I just mentioned, but there are also other principals involved.

Over the last 80 years the federal government has been grabbing more and more power from the people of the United States, reducing our liberty significantly.  Our government has gotten so big that it now spends much more money each year than it receives in tax revenue.  Our current debt stands around $14 trillion. 

Much of this money is spent on entitlement programs and kickbacks which is why progressives have been accused (rightfully so) of creating a welfare state.  So why is there no accountability to the people?  Why do many people not seem to care?  One reason is that some suffer from ULS (Utopia Logic Syndrome) that prevents people from using logic and reason to solve problems because they believe in a world that does not exist (and yes I just made that up). Another major reason is that over half the taxable population pays no taxes at all.  So if the government wants to expand entitlements beyond its means over half the population may not care because it is not their money.  If everyone has to pay something, even if it a small amount, more people would be vested in what the government is doing.  And it is only fair that everyone contribute in some way to the society that they live in…not to mention the self worth built by knowing you are doing so.  This whole idea goes back to a government principle that is supported by the Bible – Separation of Powers.  Here are a few verses:
  • Dangers of unchecked power (2 Sam 11; 1 Kings 11:3-4; Deut 17:17; 1-2 Chron; 1 Sam 8:11-18)
  • Jesus established twelve apostles to lead the Church (Matt 10:1-4; Acts 1:15-26)
  • Example of the Church being governed by multiple elders (Titus 1:5; James 5:14)
In our government we often think of the separation of powers with reference to the three branches of government, but leaders being accountable to the people is also a check on power.  When you lose accountability due to a powerful bureaucracy or through a taxation policy (both of which are now true for us), then you will begin to see major problems (power corrupts).  I think the concept of everyone paying some tax would be beneficial to society and the Bible does support this idea.

Taxes on Corporations

Once again the purpose of government is to promote good and punish evil.  As I discussed in my welfare post the government also has a responsibility to help those in our society that are most in need.  That post also described how the Bible does not support civil government’s just giving handouts to the poor  (all the Biblical support for these ideas are in that post so I won’t repeat them here).  One way to really help the poor is to make them self-sustaining.  And the best way to accomplish this is to create jobs.  And the best way to create jobs is to maintain economic policy that is business friendly.

Today the United States has the highest corporate tax rate in the world.  It is no wonder that jobs are being shipped to other countries.  This is a prime example of how liberal policies that are intended to raise money to redistribute wealth to the poor actually hurt those very people. It hurts two ways.  First, if a company is forced to pay higher taxes, they do not have the money to grow…therefore they do not have the money to hire new employees.  Secondly, higher taxes are usually just passed on to consumers through higher prices. 

So no new jobs and higher priced goods.  Not a good formula to help those in need.

I do get a kick out of politicians who demonize corporations (which remember is un-Biblical in itself) by saying they paid no income taxes so they need to tax them more.  My question to those people is what is 35% of 0? 45% of 0?  My point is corporations pay income taxes on profits and you will find that the majority of the companies referenced did not have any profits in that year and others lost money.  But they do pay taxes on their equipment and all the employees pay taxes on their earnings they receive from the company.  So the real question for those who hold progressive ideas on corporate taxation is this…What do you hold as a higher priority; helping those in need or punishing those who you deem are too wealthy?

Taxes on Capital Gains

A very similar question holds true for taxes on capital gains.  Taxes on capital gains discourages investment, which in turn slows economic growth so it has the same effect has corporate taxation.  In addition to this, there once again is the issue of property.  Who does it belong to…government, society, or the individual?  The Bible supports the idea of property belonging to the individual.  These two ideas alone would give support to limiting or completely abolishing this tax.  But there is also the idea of impartiality that has already been discussed.  Politicians have specifically targeted raising this tax out of fairness because they are once again attempting to target the wealthy.  Some try to hide this fact, but Obama was very straightforward in his rationale…he was going after the wealthy out of fairness.  I trust your reading comprehension skills are pretty good so I will not repeat that argument either.

The Death Tax

The final tax I wanted to touch on is the death tax.  This is another tax that I believe should be abolished.  But does the Bible think so?  Here are some verses that cover inheritance:

“A good man leaves an inheritance to his children’s children” (Prov 13:22)

“House and wealth are inherited from fathers, but a prudent wife is from the Lord” (Prov 19:14)

“If a man dies and has no son, then you shall transfer his inheritance to his daughter.  And if he has no daughter, then you shall give his inheritance to his brothers.  And if he has no brothers, then you shall give his inheritance to his father’s brothers.  And if his father has no brothers, then you shall give his inheritance to the nearest kinsman of his clan, and he shall possess it.  And it shall be for the people of Israel a statute and rule, as the LORD commanded Moses.” (Num 27:8-11)

The one thing missing from these verses is the government being involved in any way whatsoever in handing down inheritance to ones relatives.  That is something you will not find anywhere in the Bible.  You will find the opposite though.  Here is an example:

“The prince shall not take any of the inheritance of the people, thrusting them out of their property.  He shall give his sons their inheritance out of his own property, so that none of my people shall be scattered from his property” (Ezek 46:18)

This verse specifically says that the government should not take any inheritance from the people.  The verse also holds another interesting truth.  It says “so that none of my people shall be scattered from his property”. 

It is interesting because that is the real life consequence of this tax policy.  It is well documented that this tax often forces children to sell family businesses and farms because they do not have the liquid funds to pay for the tax.  Ironically for progressives this policy benefits the large entities that they love to bash so much.

The idea of property once again makes its appearance here (as should be no surprise since the capitalist system which is Biblically supported is based upon this principle).  The only way the death tax could be supported Biblically would be if it viewed property as belonging to the state or to society.  We all know by now that it does not.

So that is my spill on taxes.  I have left out a whole lot of practical arguments and probably some Biblical ones as well, but hopefully it is still beneficial to you.  Beneficial in dispelling myths from your liberal friends and beneficial in your own development of what our tax policy should look like in America.

The Steady Conservative