Like many of us, I am completing my federal and state income taxes in the coming few days. You may recall that earlier this year, President Obama, at a prayer breakfast, said that his Christian faith shapes his views on federal taxation. The President’s observed that his proposal to increase taxes on wealthier Americans is consistent with the teachings of Jesus. At the prayer meeting, President Obama said, “For me, as a Christian, it also coincides with Jesus’s teaching that ‘for unto whom much is given, much will be required.’”
Throughout his presidency, he has repeatedly argued that millionaires and billionaires, and corporate jet owners, should pay their “fair” share of income taxes, though his definition of “fair” has been vague. The President is emphatic that millionaires and billionaires should pay much more in federal income taxes, particularly during this weak economic recovery.
However, the President has not limited proposed tax increases solely to millionaires and billionaires, but also for middle-income earners, including singles earning an annual income greater than $200,000, and married couples earning more than $250,000. Of course, not all who earn that level of annual income are millionaires, and fewer still are billionaires or own corporate jets. In fact, a large number of tax-paying households have two income earners, and an even greater proportion of those in the top income brackets are two income earners (over 70%). Yet, the President’s suggestion raises important questions of his vision of American society in the 21st century.
Of course, the Bible urges us to be deeply concerned about the poor. But it is in the context of voluntary charity, and not through coercive governmental policies. So, under the President’s vision that is informed by his Christian faith, what would he consider to be a fair amount of federal taxation that should be paid?
In the most recent tax year for which data is available (2008), the top 1% of income earners paid 38% of total federal income taxes, and the top 10% paid almost 70% of total federal income taxes. And in 2008, the bottom half of income earners paid a total of only 2.70% of all federal income taxes. In 2009, 49.5% of the American population paid no federal income taxes. In a study published in February 2012 entitled, “The 2012 Index of Dependence on Government,” the authors noted:
Today, more people than ever before—67.3 million Americans, from college students to retirees to welfare beneficiaries—depend on the federal government for housing, food, income, student aid, or other assistance once considered to be the responsibility of individuals, families, neighborhoods, churches, and other civil society institutions. The United States reached another milestone in 2010: For the first time in history, half the population pays no federal income taxes.
This has significant implications in that we now live in a society where dependence on the federal government by an increasing portion of the American population, coupled with soaring governmental debt, creates grave risk of an economic and social collapse. Some economists have begun to contemplate the implications of a U.S. government default. (See, e.g., U.S. Sovereign Debt Crisis: Tipping-Point Scenarios and Crash Dynamics)
Can it get any worse? Well, over the next several decades, it is estimated that more than 77 million baby boomers will begin collecting Social Security checks, drawing Medicare benefits, and relying on long-term care under Medicaid. And it is also important to note that U.S. government debt now exceeds that of the Euro Zone and the United Kingdom combined ($15.7 trillion versus $12.7 trillion). So, if this continues and with an increasing number of voters who pay no income tax, how long will it be before our elected representatives respond more to demands for more entitlements and subsidies than to the pleas of taxpayers to restrain governmental spending?
Of course, such developments erode private initiative and personal responsibility. Private initiative and personal responsibility are clearly taught throughout the Bible (I Thessalonians 4:11, I Thessalonians 3:10 and I Timothy 5:8 are but several examples). This is an important conversation because the President needs to articulate clearly his vision of fairness in federal income taxes, especially now that we have begun to recognize the painful limits of federal borrowing and spending. During the 2012 debates, perhaps President Obama can answer what proportion of income taxes he considers fair for the top 10% and for the rest of our society.
And it would be of interest to ask President Obama about the fairness that all citizens and legal residents over 18 pay another form of alternative minimum federal tax of $50 or $100, or more? After all, as President Obama once famously said in an interview with George Stephanopoulos, “Everybody is going to have to give. Everybody is going to have some skin in the game.” And since the President has stated that his Christian faith informs his policy considerations, perhaps he can asked about his interpretation of the Scripture (II Thessalonians 3:10) that teaches, “If a man will not work, he shall not eat.” However, I don’t expect that he will be asked any of those questions. But his answers would be quite informative. Anyway, my suggestion is that we save our money, pay down our personal debts and plan our lives in such a way that we will not come to depend solely on social security, or other governmental benefits.
There is an interesting exchange in Ernest Hemingway’s “The Sun Also Rises.” Bill Gorton asks the once affluent Mike Campbell, “How did you go bankrupt?” “Two ways,” he replies. “Gradually, then suddenly.” The United States has been going through the gradual phase for a long time. Under President Obama, the pace has accelerated. But it seems increasingly clear to me that the gradual phase may be coming to an end. Happy Tax Day 2012, Everyone!