Paul L. Caron

Sunday, October 23, 2022

Hamill: Moral Reflections On 21st Century Tax Policy Trends

Susan Pace Hamill (Alabama), Moral Reflections on 21st Century Tax Policy Trends, 52 Cumb. L. Rev. 1 (2022):

Focusing on individual taxpayers, this article offers moral reflections on state and local and federal tax policy trends during the first two decades of the twenty-first century. Although tax policy decisions are made by politicians (who often rely on economists), determining the best tax policy is ultimately an ethical issue and serves as a barometer revealing the true moral compass of any community.

I started thinking about ethical tax policy while studying theology at the Beeson Divinity School, a conservative evangelical seminary that is part of Samford University. At Beeson, I noticed for the first time the gap between “walk and talk” in my home state of Alabama—although more than 90% of Alabamians claimed to be Christians, its regressive state and local taxes and paltry K-12 funding harshly impacted the most vulnerable and powerless Alabamians. In 2002, I published my thesis that condemned this as biblically immoral and urged all Christians in Alabama, especially political and religious leaders, to support reforms [An Argument for Tax Reform Based on Judeo-Christian Ethics, 54 Ala. L. Rev. 1 (2002)].

My article condemning Alabama’s tax policy under the moral principles of Judeo-Christian ethics generated nationwide press coverage. Internationally, the London Times also weighed in. This press coverage and numerous questions posed at hundreds of speaking engagements all over Alabama and in twenty-eight states inspired me to embark on a body of scholarship spanning a decade that morally evaluated federal tax policy and the state and local tax policy of all fifty states.

All tax policy issues ultimately boil down to answering two questions. The first defines the amount of revenues to be raised and for what purpose such revenues are to be spent. The second determines how the burden of paying the taxes needed to raise these revenues will be allocated among taxpayers enjoying different levels of income and wealth. Part I of this article briefly identifies fundamental concepts surrounding the discussion of these two questions and explains why economic theories cannot provide definitive answers.

Part II illustrates that the moral principles of Judeo-Christian ethics require tax policy that raises an adequate level of revenues so that all persons have a reasonable opportunity to reach their potential with the tax burden allocated under a moderately progressive model. Part II then explains why several community-oriented secular theories come to similar tax policy conclusions as the Judeo-Christian approach, albeit for different reasons. Finally, this part contrasts these moral frameworks to objectivist ethics, a form of atheism that values individual self-interest over all else, which only condones tax policy that raises as little revenues as possible under a burden allocation model void of any progressive elements.

After summarizing my 2002 article condemning Alabama’s state and local tax policy as biblically immoral, Part III overviews empirical research conducted a few years later that provided a helicopter view of the state and local tax policy in all fifty states. This part then illustrates that most of the states had tax policies that were just as immoral, only slightly better, or even more immoral than Alabama’s tax policy, while the others still failed to raise adequate revenues supporting reasonable opportunity under a moderately progressive model. Finally, Part III explores the most recent evidence that indicates some states have slightly improved their tax policies while others are even more unfair. Because our nation’s state and local policy essentially has not changed, it is still as immoral as it was earlier in the twenty-first century.

Part IV overviews and morally evaluates federal tax policy trends during the first two decades of the twenty-first century. President George W. Bush’s first term tax cuts eroded progressivity while benefiting the wealthiest Americans, created substantial federal deficits jeopardizing programs uplifting the most vulnerable Americans, and moved towards eliminating the estate tax. The justifications behind the Bush tax cuts were not only void of Judeo-Christian or community-oriented secular principles but also reflected objectivist ethics values. Despite severe economic challenges and partisan gridlock, President Barack Obama reversed some of these income tax trends, and although his moral conversation more closely reflected Judeo-Christian and community-oriented secular values, his compromises further eroded the estate tax. This part then illustrates that the Tax Cuts and Jobs Act of 2017, which in addition to favoring the wealthiest Americans while threatening the nation’s fiscal stability, is also driven by objectivist ethics. This article concludes that, overall, twenty-first century tax policy trends are headed in the wrong direction that are contrary to the values most Americans claim to adhere to. Although President Joseph R. Biden’s ideas could start steering federal tax policy in the right direction, objectivist ethics influences poisoning tax policy remain a powerful force that, if allowed to continue, will eventually ruin the nation.

Canopy Forum on the Interactions of Law & Religion:  Moral Reflections on 21st Century Tax Policy Trends, by Susan Pace Hamill (Alabama):

Tax policy, an important ethical issue that every voting citizen and public office holder must address, boils down to defining the amount of tax revenues needed and deciding how the burden for paying taxes should be allocated among taxpayers enjoying different levels of income and wealth. Many Americans and their elected political leaders claim Christianity in some form and, among Republicans, conservative evangelical Christianity often dominates the religious sphere. For conservative evangelical Christians, the Bible is the only authority relevant to contemporary ethical issues. This includes tax policy.

A proper interpretation and application of the Bible would first determine the broad ethical principles established for the original audience and proceed to apply those principles to “genuinely comparable situations” in modern life.

However, this cannot be accomplished by merely reading English translations without studying the ancient text’s historical and cultural context. A conservative evangelical tax policy that is biblically based would not lower but actually raise tax revenues to a level adequate enough to  ensure that all persons enjoy a reasonable opportunity to reach their potential. Achieving this goal requires much more than protecting everyone’s life, liberty, and private property, sometimes described as the “minimum state”. Tax revenues must adequately fund numerous other programs including education and safety nets for the most vulnerable people. Although still important, due to the presence of greed permeating the human condition, the benefice and charity championed by most churches cannot serve as a real substitute for adequate revenues raised by compulsory taxation. ...

Although all states are different, when taken together, the nation’s state and local tax policy paints a grossly immoral picture. The most recent study conducted by the Institute on Taxation and Policy found that “forty-five states have regressive tax systems that exacerbate income inequality,” while none of the remaining five states allocate their tax burden in a manner that even approaches a moderately progressive model. ...

Currently, our nation’s state and local tax policy reflects objectivist ethics values. Objectivist ethics, which sees each person acting in their own long-term rational self-interest as the only avenue to reach moral correctness, views individual effort as the source of all wealth. It also values above all other considerations the autonomous rights of each person to benefit from their efforts in the free market. Values stemming from an objectivist ethics view taxation as a violation of individual autonomy, and therefore attempt to limit government functions to the minimum and strongly oppose even a hint of progressivity. In addition to sharply conflicting with community-oriented secular values, objectivist ethics is “dead on arrival” for any Christian, or for any person claiming to adhere to a religious faith. This is because objectivist ethics is a form of atheism where everyone becomes their own god and, like all other forms of idolatry, leaves no place for God as the ultimate concern. ...

Twenty-first century federal tax policy trends have mostly proceeded in the wrong direction. ... Given that most Americans claim Christianity or Judaism in some form, why does objectivist ethics continue to be a stumbling block? My research for the article this essay is based on shows that the conclusion I reached almost twenty years ago is still true. Christianity has become obsessed with low-sacrifice decoys covering up the message that real faith demands high sacrifice.

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