“In a system of taxation based on justice and equity it is fundamental that the burdens be proportioned to the capacity of the people contributing” (Mater et Magistra, 132).
Every citizen has a moral obligation to contribute to the common good. In financial terms, this responsibility is carried out primarily through a person’s labor and the wealth it creates. But a citizen also contributes through the payment of taxes, which are used to fund the cost of government.
Balancing this tax burden is a matter of prudential judgment. Taxes that are adjusted to income levels are designed to place more of the burden on the wealthy. However, some argue that this policy penalizes those who are successful and discourages them from further investment and industry that creates jobs. In other words, “taxing the rich” may have negative consequences for the economy as a whole.
How the combination of progressive and regressive taxes is balanced is a source of much debate. Regardless of the solution, taxation policy should not become a weapon in class warfare. Citizens should work together to create a solution that is fair to all sides. The common good should be the goal of any taxation policy, not the interests of one particular class.
A just tax system is one that is based on a citizen’s ability to pay in proportion to the cost of maintaining government. In supporting their nation and communities, taxpayers should not find themselves unable to provide for their own families or maintain their businesses. Workers should earn enough money to pay their taxes and still take home a “living wage.” Traditional families should also be encouraged. This means that a husband working full-time should be able to support his wife and children at home.
Unfortunately, this is not always the case. Many mothers are forced to leave their children in order to earn second incomes because of the amount of tax the fathers must pay out of their incomes. This economic pressure adds to the stress and emotional cost to parents and their children. This is why the USCCB has supported family-friendly tax legislation, such as tax credits for children and direct rebates to low-income families with dependents. The bishops’ conference has also supported adjustments that would reduce the “marriage penalty” by increasing the qualifying amount for married workers.
Large corporations, small businesses, and other institutions that employ workers also have a significant impact on family stability, as well as on society as a whole. In addition to paying workers’ wages, corporations provide financial support for the common good by paying federal and state income taxes. These taxes represent another major source of revenue for the government.
To sustain the corporations and businesses that provide employment and financial support, the government should ensure that corporate taxes are low enough for both large and small companies to operate at optimal levels. “Governments must provide regulations and a system of taxation which encourage firms to preserve the environment, employ disadvantaged workers, and create jobs in depressed areas. Managers and stockholders should not be torn between their responsibilities to their organizations and their responsibilities toward society as a whole” (USCCB, Economic Justice for All, 118).
- Taxes should be fairly based upon one’s ability to pay.
- Tax policy should not penalize marriage or the raising of children.
- Corporate taxes should not threaten the capacity to create and sustain jobs.