Politics According to the Bible–Taxes

Posted: December 22, 2010 in Uncategorized

Wayne Grudem’s section on taxes encompasses the overwhelming majority of the chapter on economics and for good reason–how much a person pays in taxes is proportionate to the amount of liberty they possess.  For example, if I have $100 and I am taxed at the top tax rate of 35% then, despite working to earn $100, I have only $65 worth of fiscal choices.

Wayne Grudem argues that the is no Biblical warrant for a progressive tax system.  He favors a flat tax (i.e., everyone, regardless of their level of income, pays 10-20% and it all but abolishes the need for the IRS).  Grudem asserts that the only justification for a progressive tax system is that governments needs to soak the rich to give to the poor, which, as we discussed in earlier posts, is unbiblical and, as history has made clear,  practically unhelpful.

Grudem delves into the ins-and-outs of tax policy such as the Laffer Curve, (which demonstrates that government may cut taxes and increase revenue because lower taxes create more jobs, which create more taxpayers) to the debate over abolishing the “death tax,” (which often hits small business people, especially farmers with approximately 55% tax at the time of their demise) but I’ll leave those to your perusal. 

I do, however, want to take a moment to discuss Grudem’s overarching argument, which is that lowering taxes (both individual and corporate) and abolishing others (like the capital gains tax) benefits all members of society but especially the poor.  The liberal mantra for decades has been that cutting taxes favors the wealthy and the product is that the rich get richer and the poor get poorer.  The problem with such an assertion is that it is flatly untrue.

Grudem cites a 2007 Treasury Department study on social mobility, which clearly shows that, under the “right-wing tax policies,” the poor got richer!  In fact, the greatest progress among any social class was the poorest!   During the Gingrich-Bush era, 58% of those in the lowest income bracket moved up the scales while 25% of those in poverty joined the middle and upper-middle class.

Moreover, families’ real purchasing power fell 11% under President Jimmy Carter’s liberal policies but rose 9% under President Reagan’s conservative approach.  Thus, cutting individual and corporate taxes benefit everyone, including the poor, and often increase tax revenues.  This is why I am, what former HUD Secretary Jack Kemp called, a bleeding heart conservative.

Tomorrow, social security policy.

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