American Charity: The Moral Basis for Taxation
in Order to Care for the Needy

Proverbs 29:7 "The righteous care about justice for the poor, but the wicked have no such concern."

I have read and heard so much lately, from the politically far right in America, about how immoral it is for a government to take money from the rich and give it to the poor. Class warfare they call it. It has been repeated so much by so many that it frightens me. I have especially started to hear it from Christian folks who should know better. Sadly, they don't, which is the reason for this long (5,500 word) article.

Several avenues of exploration will be required to adequately discuss whether or not the United States should be taxing the public in order to provide assistance to those in need. I have divided the discussion into five parts:

  1. Is it improper for our government to redistribute wealth through taxation? That is, is there any reason (legal, natural law, or moral basis) why our government should not levy a progressive tax; i.e., one that taxes the poor at a lower rate than the rich? (Is there any reason why it should? This is covered in the next two parts.)

  2. If we agree that there may be a moral context to consider regarding taxation of the rich to benefit the poor, then we can explore those moral contexts. I limit my context to the words I find in the Bible, although such a restrictive approach need not be applied.

  3. Is there any reason why taxation is superior to free-will donations through Churches, Synagogues, Charities, etc.?

  4. Heavy abuse of our welfare system was evident in the not too distant past, and to a lesser degree still exists. Is the best solution to end all welfare, or to resolve the abuses?

  5. What are the proportions of corporate welfare versus welfare to individuals? Which has greater fraud?

Part 1: Is it improper for the government to redistribute wealth through taxation?

We are a democracy. But this does not always mean majority rule. In many specific areas, our Constitution protects minorities from rule by the majority. The majority cannot suppress my rights of free speech, of peaceful assembly, of religious freedom, of due process, or trial by jury. It is the Constitution and its Bill of Rights that lay down the basic freedoms and obligations of our society. We agree to be governed by the laws of our land in return for the government's promise to maintain the freedoms we "signed up for" in the Constitution. The point to be made is that we have an underlying framework of law that tells us what the government can and cannot do. It also tells the people what they can and cannot enact by majority rule. These Constitutional rules can only be changed by a two-thirds majority vote of Congress.

It is also true that the Constitution limits government from usurping powers beyond those specifically given to them in the Constitution. This does not mean that there can be no new laws. Not at all. It means that new laws have to "fall within" the scope of the powers given to government by the Constitution.

So, with that understanding behind us, the obvious question that needs to be asked is: Does the Constitution give the government power to levy taxes? And does it place any particular limits on that power?

The power to impose income tax comes from Article I section VIII which provides:

"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;"

Article 1 defines the government's powers to levy four sources of income: taxes, duties, imposts, and excises. Then, the Article demands that duties, imposts, and excises must be uniform throughout the United States. It lays no such demand on taxes, however. The uniformity of duties, imposts, and excises was intended to facilitate interstate commerce and to prevent protective tariffs from creating friction and possible war between the several states. The Article implicitly recognizes that each state has the power to levy whatever taxes its people will accept, and implicitly recognizes that the federal government has the power to levy taxes in the same manner -- both state and federal governments being answerable to what their people will agree to, accept, or tolerate.

The 16th amendment merely removed a distinction between direct tax (tax on profits from property) and indirect (tax on wages or professional receipts). It changed nothing in Article 1.

Thus, there is nothing in our Constitution that forbids a progressive tax. Nary a word. We may wish there was more there, but there is not. So the legal barrier is leapt.

The next concern is whether a progressive tax can be levied for the purpose of providing aid to the needy? In other words, does Congress have the power to levy tax for this purpose? Yes, because the "general welfare" clause empowers Congress to do what it thinks is best for the people's "general welfare." Many who oppose welfare and progressive taxes dislike this clause, and wish it would go away; but it is there.

Next is the question of natural law. Does natural law have anything to say about progressive income tax? Despite Rush Limbaugh's loud and persistent assertions and protestations, there is inherently no natural law that would make a "just" government prefer a flat tax. This seems irrational to those who have been conditioned to believe that a progressive tax is unfair. But there are others who have been conditioned to believe that a progressive tax is fair. To these latter persons it seems perfectly natural. And these latter people are not callous Robin Hoods looking for a way to "steal" from the rich to give to the poor. These people believe it is the best form of governance. More on that soon.

In the book Natural Law and Contemporary Public Policy, by David F. Forte, the issue of natural law and progressive tax are addressed from the perspective of "fairness:"

"It is often argued that there is a trade-off between equity and efficiency; for example, that a flat tax rate would increase output but be regressive in its distribution, while a progressive tax-rate structure would be "fair" but reduce real incomes. But this is a false dilemma. Progressive tax rates and multiple taxation of some property income are a rough offset to the fact that most property income never shows up in the tax base. If all gross income were included in the tax base, a flat tax rate would be about as progressive as the current tax code, because most of the missing income accrues to upper-bracket families."

Looking at our tax system from a natural view to fairness, Forte's argument is that our current progressive tax has an inherent fairness because it corrects for the exemption from taxation of income derived from properties largely held by the rich. He further argues that if this income were included in the taxable base, a flat tax would be about as progressive as the current tax code. As for me, I think Forte's analysis should be introduced into our national tax-fairness debate. Is Rush Limbaugh willing to be truly fair, and tax all sources of income, or does he only want the exemption of much of the rich's income, and a flat income tax for them too?

The opponents of progressive taxes love to yell "class warfare" whenever anyone espouses graduated income taxes. But they really do not seek fairness, because they wage class warfare in the exemptions of property income, in corporate welfare, executive salaries 1000 times that of the average worker, and laws that exempt corporations from the same level of responsibility as individuals, but allows them to snooker customers in deceptive contracts, and to impose predatory rate hikes and usurious interest rates on credit cards (something like 50 percent have greater than 25 percent interest rates). From a natural law perspective, fairness is the issue. If you have a mind to be truthful, the rich of America are not being downtrodden by our current tax structure, nor by our laws and statutes, Rush Limbaugh's assertions notwithstanding. If anything, the poor need more defense by our government from the predations of the very rich corporations.

There are many good, rational reasons for a progressive tax, including the following:

  1. A repayment in proportion to the opportunities that a good government affords to an American entrepreneur. In other words, "To whom much is given, much is required."

    Some of the financially fortunate of America imagine their wealth is totally of their own doing. I wish they could be transported to India in a time machine, and start their life there in a lower caste. No matter what their IQ, no matter what their education, no matter what their drive, insights, or determination, they would not succeed. You see, it is one of the marvels of our society that people of determination can succeed. This is so very rare in most countries. No wonder so many people try to immigrate here, legally or illegally!

    Our financially fortunate don't care to pay in proportion to the opportunity that this country has afforded them. One might be tempted to construe this as ignorant; or if understood, as a bit unpatriotic.

  2. Buying political power is a fact. Mitigating this buying of political influence is critical in a democracy, because it is so corrosive to democracy itself. The history of the United States clearly shows that democracy in the Gilded Age was in great danger of failure until the anti-trust laws, anti-monopoly laws, and progressive income tax were instituted. It took all three to end the death grip the wealthy had on America's governance. Make no mistake, progressive taxation helps greatly.

  3. Throughout time most societies have prescribed that wealth was not to be used selfishly but to be used to help those less fortunate. This works in small tribal societies where prestige accrues to the wealthy when they distribute their wealth to the poor. But in a nation of 300 million, the incentive is much less. Progressive taxation is more coercive than voluntary giving, but in the absence of the latter, what is left but the former? Opponents of progressive tax propose that such giving should be strictly voluntary. But this is disingenuous. It ignores the fact that in small societies there was social coercion, and in large societies where social coercion doesn't work the alternative is taxation. Society gets its due one way or the other.

Many claim that a progressive tax is unbiblical. This is either an argument based on ignorance or disingenuousness. Under Old Testament theocracy (government run on theological principles) here were the requirements: Flat 10-percent tax of the GROSS. Plus a free-will component, plus other fees, plus strong requirements regarding the care and feeding of strangers. Wealth was to be used to help the widows and fatherless, on threat of losing one's soul (Talk about coercion!). Note that the flat tax was on the gross, which we have shown from David Forte's work, is progressive because the wealthy own most of the income producing property that is exempt from taxation.

In the absence of either Constitutional restrictions or violation of natural law, we are left with the will of the people. We live in a democracy where the people can have the form of taxation we choose, as is amply demonstrated by the 50 different tax codes in the States. If we feel that taxation is one of the component of governance in which we can best reflect the national morality we profess, then it can be a progressive tax system, specifically designed for promoting a better society. We can have progressive income taxes if that is what we want. There is no violation of our Constitution, of natural law, or of morality. And we need not accept the nonsense about it being class warfare or Robin Hood theft; if anything, it is a proper antidote against class warfare waged by the privileged.

(Sure our system of taxation and of redistribution has many faults, but we'll deal with those in Part 4.)

Part 2: The moral imperative.

Because much of the furor over progressive taxes is currently coming from the religious right, they deserve a rebuttal based on their own criteria, namely what the Bible has to say about the issue. So if you are not Christian or at least not religious right, this section may not speak to you. But if you are, this Part 2 is specifically for you.

In order to inherit eternal life, we must be a good neighbor to every man, not just those of our own faith. This is very clear in the Bible. But it seems to have been forgotten by almost all churches. Jesus told the story of the good Samaritan. Now, a Samaritan was not a person well thought of by the Jews he was speaking to. A Samaritan was one excommunicated by the Jews, a byword among them, synonymous with heretic and devil (Joh_8:48; see on Luk_17:16-18).

Lets read the story Jesus told:

"Luk 10:25 And, behold, a certain lawyer stood up, and tempted him, saying, Master, what shall I do to inherit eternal life?
26 He said unto him, What is written in the law? how readest thou?
27 And he answering said, Thou shalt love the Lord thy God with all thy heart, and with all thy soul, and with all thy strength, and with all thy mind; and thy neighbour as thyself.
28 And he said unto him, Thou hast answered right: this do, and thou shalt live.
29 But he, willing to justify himself, said unto Jesus, And who is my neighbour?
30 And Jesus answering said, A certain man went down from Jerusalem to Jericho, and fell among thieves, which stripped him of his raiment, and wounded him, and departed, leaving him half dead.
31 And by chance there came down a certain priest that way: and when he saw him, he passed by on the other side.
32 And likewise a Levite, when he was at the place, came and looked on him, and passed by on the other side.
33 But a certain Samaritan, as he journeyed, came where he was: and when he saw him, he had compassion on him,
34 And went to him, and bound up his wounds, pouring in oil and wine, and set him on his own beast, and brought him to an inn, and took care of him.
35 And on the morrow when he departed, he took out two pence, and gave them to the host, and said unto him, Take care of him; and whatsoever thou spendest more, when I come again, I will repay thee.
36 Which now of these three, thinkest thou, was neighbour unto him that fell among the thieves?
37 And he said, He that shewed mercy on him. Then said Jesus unto him, Go, and do thou likewise."

Note two points:

  1. The Jews relied on their race and religion for their righteousness. Jesus, however, wholly discounted both. The Samaritan -- a rejected religious specimen, regarded as a heretic -- was the one Jesus said was righteous, because he helped his neighbor.
  2. The Samaritan and the man he helped were not of the same religious sect. Jesus did not limit the "neighbor" clause to those of the same faith.

Not everyone who claims that Jesus is Lord will enter heaven. Just those who do what he demands. One of the specific commands is to feed the hungry, water the thirsty, cloth the naked, house the stranger, and visit the prisoner. These acts, Jesus declared, are acts of righteousness.

First, Jesus declares that those who do the will of the Father will enter the kingdom of heaven, and those that don't won't:

"Mat 7:21 Not every one that saith unto me, Lord, Lord, shall enter into the kingdom of heaven; but he that doeth the will of my Father which is in heaven.
22 Many will say to me in that day, Lord, Lord, have we not prophesied in thy name? and in thy name have cast out devils? and in thy name done many wonderful works?
23 And then will I profess unto them, I never knew you: depart from me, ye that work iniquity.
24 Therefore whosoever heareth these sayings of mine, and doeth them, I will liken him unto a wise man, which built his house upon a rock:
25 And the rain descended, and the floods came, and the winds blew, and beat upon that house; and it fell not: for it was founded upon a rock.
26 And every one that heareth these sayings of mine, and doeth them not, shall be likened unto a foolish man, which built his house upon the sand:
27 And the rain descended, and the floods came, and the winds blew, and beat upon that house; and it fell: and great was the fall of it."

Next, Jesus says that those who want to inherit the kingdom must have done certain acts of righteousness: feed the hungry, water the thirsty, cloth the naked, house the stranger, and visit the prisoner.

"Mat 7:34 Then shall the King say unto them on his right hand, Come, ye blessed of my Father, inherit the kingdom prepared for you from the foundation of the world:
Mat 25:35 For I was an hungred, and ye gave me meat: I was thirsty, and ye gave me drink: I was a stranger, and ye took me in:
36 Naked, and ye clothed me: I was sick, and ye visited me: I was in prison, and ye came unto me.
37 Then shall the righteous answer him, saying, Lord, when saw we thee an hungred, and fed thee? or thirsty, and gave thee drink?
38 When saw we thee a stranger, and took thee in? or naked, and clothed thee?
39 Or when saw we thee sick, or in prison, and came unto thee?
40 And the King shall answer and say unto them, Verily I say unto you, Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me.
41 Then shall he say also unto them on the left hand, Depart from me, ye cursed, into everlasting fire, prepared for the devil and his angels:
42 For I was an hungred, and ye gave me no meat: I was thirsty, and ye gave me no drink:
43 I was a stranger, and ye took me not in: naked, and ye clothed me not: sick, and in prison, and ye visited me not.
44 Then shall they also answer him, saying, Lord, when saw we thee an hungred, or athirst, or a stranger, or naked, or sick, or in prison, and did not minister unto thee?
45 Then shall he answer them, saying, Verily I say unto you, Inasmuch as ye did it not to one of the least of these, ye did it not to me.
46 And these shall go away into everlasting punishment: but the righteous into life eternal."

Paul tells us that giving to the poor is an act of righteousness:

2Co 9:6 But this I say, He which soweth sparingly shall reap also sparingly; and he which soweth bountifully shall reap also bountifully.
7 Every man according as he purposeth in his heart, so let him give; not grudgingly, or of necessity: for God loveth a cheerful giver.
8 And God is able to make all grace abound toward you; that ye, always having all sufficiency in all things, may abound to every good work:
9 (As it is written, He hath dispersed abroad; he hath given to the poor: his righteousness remaineth for ever."

Jesus places great emphasis on sharing wealth as a condition of inheriting eternal life:

"Luk 18:18 And a certain ruler asked him, saying, Good Master, what shall I do to inherit eternal life?
19 And Jesus said unto him, Why callest thou me good? none is good, save one, that is, God.
20 Thou knowest the commandments, Do not commit adultery, Do not kill, Do not steal, Do not bear false witness, Honour thy father and thy mother.
21 And he said, All these have I kept from my youth up.
22 Now when Jesus heard these things, he said unto him, Yet lackest thou one thing: sell all that thou hast, and distribute unto the poor, and thou shalt have treasure in heaven: and come, follow me.
23 And when he heard this, he was very sorrowful: for he was very rich.
24 And when Jesus saw that he was very sorrowful, he said, How hardly shall they that have riches enter into the kingdom of God!"

In summary, the Christian imperative is unequivocal. But the ever ready answer from the opposition is that all of this was voluntary, not a taxation. To which we should respond, "Why so?" At the base level we have established a moral responsibility that is unequivocal. In a democracy we the people have every right to incorporate this moral responsibility into our tax codes if that is what we want. Tribal societies do it by social coercion, we do it by tax code. Nothing immoral or wrong about it. In fact, it is a highly moral proposition. (I'm truly amazed at the religious folks who would coerce everybody else to follow their moral codes, but they yell "foul" when the people of America decide that a progressive tax is a good national morality.)

Part 3: Why is taxation superior to free-will donations through Churches, Charities, etc.?

Historically, and I speak of England, France, Spain, Russia, and other Christian countries, this is how the poor were cared for. If the churches didn't practice charity, there was none. And it failed miserably at a national level. Not just occasionally. Always. It always was and always will be insufficient, as I will prove soon. Plus, it always came with religious strings attached; the "We take care of our own." string. To obtain charity, one had to profess the appropriate religion. This is distinctly unChristlike. If you missed it, go back and reread the first paragraphs of the last part of this paper.

This approach to charity is a grossly inequitable sharing of the burden. Over 30 percent of America's population has not been to church in the past 6 months. On any given weekend, only 20 percent of Americans attend church. Of those who do regularly attend church, only about 17 percent claim they tithe (give 10 percent or more to the church), and only 3 percent really do tithe. (That is, less than 2 percent of our total population give 10 percent or more to their church.) Do we really expect those who don't even pay to support their church they attend will voluntarily pay to support the widows and fatherless? And even if 100 percent of all church tithes were to go to the poor, the needs would still greatly surpass the available funds. And the total burden would be on the very few who pay tithes. Sure there are other funds coming to the churches from members who give less than 10 percent. But the meager $1 to $10 per week that goes into the offering basket from these folks is scarcely sufficient to support the ministers and the buildings. (See for more on American church attendance.)

Those who propose that all charity be free will are either completely unaware of the numbers cited above, or they just want giving to be voluntary so they don't have to give. It really is as simple as that, and needs no further words to state the foolishness of this proposal.

Part 4: Abuse of the welfare system exists. Is the solution to end all government sponsored welfare, or to resolve the abuses?

Welfare in America is a lesser percentage of the government's total annual expenditures than one would think. I do not include Social Security and Medicare in the mix, as these are operated as insurance programs, available to citizens who meet the age requirements regardless of their income. And so far they have been fully self supporting. They may be socialized, just like public schools, and virtually all housing loans since the real-estate crisis, but they are not welfare. Welfare is what we spend for the widows, fatherless, and unmarried parents through non-insurance programs. One's income must be below a certain level to qualify for welfare. Social Security, Medicare, and Medicaid do not meet this test. They are social programs, but not welfare, because they are available to all income classes.

The United States spends less than 3 percent of GDP on programs that reduce inequality among those younger than 65. Canada spends 5.5 percent. Most of Europe spends 7 percent. Scandinavian countries spend about 12 percent. U.S. programs reduce poverty among the nonelderly by 28 percent, compared with 54 percent in Canada, 61 percent in Britain, and 78 percent in Sweden. These numbers greatly understate the differences, because they don't take into account that the U.S. alone does not guarantee health care.

Are we so callous that we cannot afford to spend 5 to 6 percent of our GDP to take care of those in need? Abuses on the order of 10 percent -- way higher than any study claims -- would be a waste of 0.005 to 0.006 of our GDP. Using your own income for comparison, if you do not "waste" that much per year, then you are an economic genius -- or a complete Scrooge. My guess is that most Americans waste far more of their income, percentagewise, on frivolous "feel-good" things than our government wastes on fraudulent welfare cases. Remember that $3.20 Starbucks latte, which you could have made at home for $0.30? That, dear reader, is defined as waste when it is applied to our government's spending.

The news media has made much ado about welfare fraud, and every citizen has the right and obligation to be upset about it. But a little perspective is good as well. I am among the first to admit that far-left Democrats for a time thought that just throwing more money at the problem would solve it. This proved untrue. And welfare reform was enacted, and greatly reduced the waste, fraud and abuse. Is it perfect now? No way. But is it so flawed that we'd jettison the thousands of truly needy to bring waste, fraud, and abuse to zero? Good governance demands that we continue to reduce waste, fraud, and abuse, but not to the point of abandoning those who truly need our help. We are a more moral nation than that, I hope.

Part 5: What are the proportions of corporate welfare versus welfare for individuals? Which experiences greater abuse?

First a definition. Rather than separate out special programs that are government handouts to corporations versus special programs that are government handouts to wealthy families, I simply lump them both into the term "corporate welfare." I use the term to generally differentiate between government assistance to the needy versus government assistance to the wealthy. I use the term loosely simply to keep this part of the paper shorter.

Let's see how well you remember the events of the past 2 years. How much did our government spend on bail outs for the five biggest investment banks in America? Recall that America's spending for welfare is less than 3 percent of our GDP annually? Well, the bailout funds for the banks were more than our annual GDP. And that is just one example. Let's look at a few more.

  1. Do you know how difficult it is to grow your retirement fund safely? If you want high security, you put your money into a bank savings account, or bank CDs, or government bonds. And all of them yield about one-half of one percent more than the annual CPI (consumer price index). For example, if the CPI is rising at about 3 percent per year, you will be able to get about 3.5 percent per year for your money deposited in the aforementioned securities. For every dollar you deposit, you'll get back 3 1/2 cents earnings after the year has passed. But your earning power on that dollar has shrunk by 3 cents during the same year, so your effective earnings are just the 1/2 percent difference. And, guess what? The federal government taxes you for the entire 3.5 percent earnings. If your marginal tax rate is 28 percent, then the federal government gets twice your 1/2 percent earnings -- leaving you with less than you started with in earning power. And this does not even consider state taxes.

    Is this arrangement an accident? Does the government not know that you cannot keep your money safe without it being taken away through taxation. Of course they do! It is a very purposeful tax system. The government does not want all that money tied up safely. They want it in higher risk investments, where it does the economy more good. This is established economic doctrine. But does it apply to everyone equally? No way.

    Qualified investors do not face the same tax on high-safety deposits as you and I do. They have convinced Congress that the funds they keep to "securitize" their more risky ventures should not be taxed. You get taxed on your retirement fund, which "securitizes" your old age. The get a break from almost all of that tax on the same investment instruments. Now, that is corporate welfare if I ever saw it.

  2. The tax code is filled with special exemptions for investment instruments used almost exclusively by the wealthy. Recall the single example provided by David F. Forte, in Natural Law and Contemporary Public Policy, where he shows that most property income, greatly favored by the wealthy, is largely untaxed. Recall your lawyer's annual salary in the millions, but most of his lunches and dinners are tax deductable. So are many of his vacations. I recognize that there are legitimate business expenses associated with being a successful lawyer, but there is no need for the government to help pay for $100 dinners. Business can be conducted in the office. If the lawyer wants to eat while conducting business, then he should pay for his meal, like the rest of us. Simply separate out the benefits to him versus the legitimate expenses of his business. This is a clear example of corporate welfare.

  3. In the Tucson and Phoenix areas of Arizona, where I live during the winters, there is much talk of water shortages. Nonsense. Here are the true facts. The Federal Government spent billions to bring Colorado River water, Salt River water, and other water sources to these fertile agricultural valleys. They deliver subsidized water to cotton farmers at considerably less price than it costs to get it to them. The cotton farmers utilize about 4 to 6 acre-feet of water per year to grow cotton, which they sell at a government subsidized price to the cotton mills. The amount of subsidized water used to grow subsidized cotton is so much that if the two subsidies were cut off, the existing water delivery systems could provide enough water for the expansion of Tucson and Phoenix for the next millennia. This is no joke. And the general public thinks we have a water shortage. We do, but it is artificially created by two big government subsidies. This, friends, is corporate welfare.

I could go on, but I'm way past my self-imposed word limit. The paper may or may not sway your political beliefs. I had no pretenses at the start that I could dissuade many of their firmly held beliefs. I will be satisfied if those of you who are against progressive taxation will simply understand that those of us who believe in it are not engaged in class warfare, we're not stupid fools, we're not closet communists, we're not amoral or damned secular humanists, we're not trying to make our country a socialist state, and we're not Robin Hoods. We just have a heart for the poor, and seek fairness in our system of taxation. Our views differ from yours, but nonetheless are well thought out.

I am quite certain that some who oppose progressive taxation will appreciate this paper, even if they remain in opposition. I am also quite certain that others will still regard those of us who favor progressive taxation as all of the things I claim we are not. All I can do is offer a cogent explanation for what we believe. You must do with it what you will. Regardless, I wish you my best.

-- mof, 1/27/2010

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