A very good piece on taxation, income inequality and fairness in today’s Wall Street Journal by Arthur C. Brooks, president of the American Enterprise Institute. Brooks, a frequent guest speaker at Acton events, is also author of “The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America’s Future”, forthcoming from Basic Books in June. Watch for the review on the PowerBlog soon.

Simple facts about our tax system do not support the contention that it is “unfair” in favor of the rich. According to the most recent IRS data, the top 5% of earners bring in 37% of the income but pay 60% of the federal individual income taxes. The bottom half of earners bring home 12% of the income but pay 3% of the taxes. Today, according to the Tax Foundation, 60% of Americans consume more in government services than they pay in taxes.

In sum: A large majority disagrees with the current administration’s redistributionist philosophy; believes the rich already face a tax rate that is too high; and disapproves of the fact that more and more Americans pay nothing in federal income taxes. So why do arguments like the president’s persist?

The answer is that nobody wants to sound anti-poor, so we too easily concede the notion of fairness to those who define it as redistribution and criticize redistribution only because it leads to economic inefficiency.

This is an error. There is nothing inherently fair about equalizing incomes. If the government penalizes you for working harder than somebody else, that is unfair. If you save your money but retire with the same pension as a free-spending neighbor, that is also unfair.

Read “‘Spreading the Wealth’ Isn’t Fair” on the Wall Street Journal Web site.

  • Chris

    John,

    Great post! One of the dilemma’s I find my family in frequently is that we are in the lower tax bracket and therefore do not pay out a lot of taxes. However, when we file our taxes, as we are required to do, we inevitably have a refund. We try to adjust our forms to compensate but every year this happens. We feel bad about it but short of failing to file we are “forced” to take it. Has anyone done a post on what the Christian response to this would be? Thus far we have been giving it to charities and/or investing in local food pantries.

    Thanks!

  • http://www.acton.org John Couretas

    Chris: Not aware of any commentary on your predicament, although I would say that your response — charity — is admirable under the circumstances. You might be interested, also, in the Effective Stewardship curriculum produced by Acton and Zondervan.

  • Nathan Barton

    As a christian and free-market type, I strongly believe that Chris’ charitable giving is the PREFERRED action in this situation – especially if careful to give to institutions that do not receive and do not accept governmental assistance of any type. Or even better, to individuals (such as families with children who could not otherwise afford private schooling).

  • Chris

    John and Nathan,

    Thank you for thoughtful replies. This is something that I see more and more of my fellow believers wrestle with as they see the mounting debt and the recent figures on the number of people receiving refunds. We struggle with it because on the one hand we are told to “render unto Caesar” but on the other hand “thou shalt not steal.” Some of us live in this tension of a government sanctioned institution of injustice. I don’t want to steal from those that can create jobs through their creativity and positions, but I don’t want to stop paying taxes, both for security and moral sakes.

    However, I also have a problem with giving that money to charity because it is still someone else’s money, it is not mine. If I rob a bank is it okay so long as I, like Robin Hood, give it to the poor and needy? The fundamental problem of government over-spending and entitlement programs is still not solved. As a Christian I am coming to believe that I cannot do this either. More thought must be applied to this situation.

    Thanks gentlemen!

  • Brett

    Another thing we have to take note of is how people are getting all this money? I do agree that the rich being heavily taxed is wrong but how are the rich so rich? Is there key area’s in their wealth generation that destroys community,environment and even the economy? If that is the case it only seems fair to the tax the rich to fix the problems of poverty and environmental degradation. There must be solution to come to that does take away heavy tax burdens from the rich but also incentives at the same time business practice that are economically sound, socially uplifting and environmentally restorative.