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ONE COURAGEOUS TAXATION CONVERSATION A Preparation Guide

Our new Constitution is now established, and has an appearance that promises permanency; but in this world, nothing can be said to be certain, except death and . Benjamin Franklin

“The difference between death and taxes is death doesn't get worse every time Congress meets.” Will Rogers

The clever 17-year-old blew up a birthday brunch by protesting the crushing blow of that he now had to pay on the wages of his very first part-time job (moving furniture at a consignment store). He had gleefully torn the envelope from his first paycheck to glimpse the fruit of his labor on paper; but his countenance dimmed when he noticed that the bottom line didn’t match his calculation of hours worked multiplied by wage per hour. He was good at math. What had happened? The offending items were government withholdings. Over eggs and toast, he shouted to anyone who would listen, “I can’t even vote. This is taxation without representation!” There followed a spirited family debate about the burdens and blessings of our American revenue-raising system. In this, our young revolutionary joined a trend that spans human history: governments tax their people, and their people complain about being taxed.

In a U.S. election season, the issue of taxes, along with the competing philosophies about their purpose, usually plays an important role in the electorate’s decision-making. These debates reveal our values. The authors of a recent social history of ancient Greece make precisely that claim about an ancient : ancient Athenian taxation systems are “revealing not only of their economic mentality but of the whole system of values on which the Greek city was built.” (Austin and Vidal-Naquet, Economic and Social History of Ancient Greece 1977) In a faithful Christian’s life, taxes and the issues surrounding them can help us clarify our own values. When said, “Where your treasure is, there will your heart be also,” he suggested that how we relate to can expose what is most important to us.

Taxation 1 Courageous Conversation 14 OCT 18 © Allen Hilton Our Courageous Conversation on taxation will naturally reflect our values, and our values differ. We launch our discussion confident that those differences can help us. To achieve the benefit of our variety, we’ll need to navigate the proper but sometimes divisive tensions between the value on the individual and the community, public and private resources, rights and responsibilities.

In a nation whose formation partly grew out of a Boston tax revolution, these issues are especially fraught with passion. In this guide, we set the table for a robust, honest, civil discussion of a central disagreement in our democracy.

PURPOSE – Why We Talk

In an American and Christian season when talking to people with opposite convictions can be painful and even demeaning, we venture this conversation to accomplish important goals.

1. To Get Better at Disagreeing Lovingly

In a time of incivility and disrespect between people who disagree on important matters, Courageous Conversations are designed to help rebuild atrophied muscles for disagreeing civilly and respectfully.

We must no longer be children, tossed to and fro and blown about by every wind of doctrine, by people’s trickery, by their craftiness in deceitful scheming. But speaking the truth in love, we must grow up in every way into him who is the head, into Christ… (Ephesians 4.15)

2. To Develop Our Convictions from Our Relationship with God

In an age when American Christians often primarily draw their political opinions from their party or tribe, instead of the voice of God through Jesus and scripture and their faith community, we commit ourselves to reversing that order. We will pray for God to move us from Christ to the world and its matters.

Seek first the Kingdom of God and God’s righteousness, and all these things shall be added to you. (Matthew 6.33)

3. To Celebrate Our Differences as Assets, Rather Than Threats

In an era of echo chambers, when Americans flock to birds of their own theological and political feather, courageous Christians capitalize on the God-given value of our differences. (1 Corinthians 12.4-26) This also means listening for God’s voice in the things others say.

Now there are varieties of , but the same Spirit; 5 and there are varieties of services, but the same Lord; and there are varieties of activities, but it is the same God who activates all of them in everyone. To each is given the manifestation of the Spirit for the . (1 Corinthians 12.5-7)

Taxation 2 Courageous Conversation 14 OCT 18 © Allen Hilton

4. To Normalize Conflict

In the New Testament and history, Christians address disagreements directly in order to move forward. Contemporary Christians tend to avoid these direct conflicts, opting rather for “echo chamber” chats with people who agree with them. Courageous Conversations help us get over our fear of moving toward one another in our disagreements.

Certain individuals came down from Judea and were teaching the brothers, “Unless you are circumcised according to the custom of Moses, you cannot be saved.” 2 And after Paul and Barnabas had no small dissension and debate with them, Paul and Barnabas and some of the others were appointed to go up to Jerusalem to discuss this question with the apostles and the elders. (Acts 15.1-2)

5. To Save Our World

If churches can learn to disagree and solve our problems in constructive, collaborative ways, we can become a resource to our cities, states, regions, nations, and all nations. In other words, by learning talk well with one another, we’re ultimately saving the world.

Jesus prayed, “Father…I in them, and you in me, that they become completely one, so that the world may know that you sent me, and that you love them as you love me. (17.23)

PROCESS – How We Talk

In order to build new muscles for civility and mutual understanding, we build some basic practices into our Courageous Conversations.

1. We actively love one another. Jesus’ Golden Rule is the most direct guide to our conduct: “Do to others as you would have them do to you.” (Matthew 7.12) In our Courageous Conversations, this usually show up as active, patient listening and constructive, respectful comments. (John 13.34-35)

2. We “Listen for what the Spirit is saying to the church.” Christians believe that we all have the Spirit of God. This makes us listen for God’s voice, even if it comes from a very unexpected voice. To remind ourselves of this, after any person speaks into our conversation, we repeat this chorus: “Hear what the Spirit is saying to the church.” (1 Corinthians 14)

3. We Take Community Responsibility If tensions rise and begin to get out of hand, that is not just an issue for the two or three people in the fray. It is a community issue, so, as Paul called the Philippian church to “help” Euodia and Syntyche, we are all called to help as we can to restore Christian love in the community. (Philippians 4.2-3)

Taxation 3 Courageous Conversation 14 OCT 18 © Allen Hilton Taxation 4 Courageous Conversation 14 OCT 18 © Allen Hilton Defining Taxes

Below are two definitions of taxation that cover several important parts of our topic.

"Tax is a compulsory payment, in currency or in specie, exacted by a public authority, for the purpose of satisfying the latter's own needs or those of the public, or part of the public.” (M. Elon, “Taxation” in The Principles of Jewish Law)

“A means by which governments finance their expenditure by imposing charges on citizens and corporate entities.” (http://www.businessdictionary.com/definition/taxation.html)

The primary points of these two definitions tell us that tax is…

1. a compulsory payment, 2. paid in different units of value (currency, goods, or labor), 3. mandated by a public authority, 4. to meet the needs of the authorities and/or the public, 5. levied on individuals and corporate entities.

Our Questions

This topic gives birth to a plethora of questions on related topics, making it difficult to focus our conversation on matters and questions that will produce the most fruit. These issues will guide our conversation on taxation:

1. The primary purpose for taxes is to raise revenue to pay government costs. Given that government has many objectives, which objectives of a people are worth taxing people to supply? 2. Beyond collecting revenue, what other purposes do tax systems serve? (E.g., incentivizing and disincentivizing certain behaviors) 3. Should everyone pay the same percentage () or should the tax load increase in percentage for higher-income citizens (progressive/graduated tax)? 4. How should we decide what counts for public and private resourcing of things we value? 5. In a context in which some people will not pay certain taxes because they disagree with the uses their government makes of the revenue, and others work to pay as little as possible so they have more to spend, what is the ethical place of ?

Our conversation will have a life of its own, but these questions will usher us into important parts of this important issue.

Taxation 5 Courageous Conversation 14 OCT 18 © Allen Hilton The Present Divide

The two American political tribes have very different philosophies about taxation. Any brief characterization must paint with a broad brush that risks inaccuracy. However, broadly speaking…

• conservatives work to reduce government spending on programs other than defense and security, leaving social assistance to be carried out through private entities, rather than public funding. In their view, international aid should be limited and have strategic, usually security and defense based purposes. This prompts a strong belief in lower tax on the individual and businesses. • progressives work to increase government social welfare budgets and international , while often working to shrink defense and security budgets. Progressives tend to be more comfortable with tax increases, as long as the money is destined for the sort of programs that produce what they deem to be “the general welfare.”

This broad-brush characterization may oversimplify, and it certainly does not treat the current differences within the two parties – between Sanders progressives and “mainstream” or “establishment” Democrats, or between protectionist and free Republicans. However, it captures the customary election-year rhetoric of the two sides. Democrats often accuse Republicans of damaging austerity, and Republicans often paint their opponents as “tax-and- spend Liberals”.

Each of these strategies rises out of a philosophy of government.

• Republicans generally believe in a limited government and highly value individual freedoms and responsibilities. Social welfare is seen as a private concern, rather than a governmental one, and what is required gets moved to state and local levels. The right sees the primary purposes of the federal government as “provid[ing] for the common defense” and “secur[ing] the blessings of liberty” with less attention to building programs that “promote the general welfare.” • Democrats see government, rather than private initiative, as a primary vehicle for doing the community and the world good. This approach is often likened to European models, where social programs assist the unemployed, the infirm, et al. using federal government funds. In the language of the preamble, their first energies go to “promot[ing] the general welfare,” and they often see themselves as a corrective to an oversized defense and security instinct.

While this brief description is a gross oversimplification, it does outline a primary tension within our electorate on the issue of tax rates and purposes.

Taxation 6 Courageous Conversation 14 OCT 18 © Allen Hilton The Bible and Taxes

When his religious critics wanted to put Jesus on the spot, they asked him, “Shall we pay taxes to Caesar?” – because they knew that the people of the land resented Roman taxation, while the officials routinely spied out popular preachers who criticized the system. Jesus sagely navigated the peril with his famous reply, “ what is Caesar’s, and to God what is God’s.” (Matthew 22.21)

Two decades later, when the Apostle Paul saw that those same Roman officials might see the fledgling Jesus movement as a threat, he wrote to Christians in the capital city,

6 For the same reason you also pay taxes, for the authorities are God’s servants, busy with this very thing. 7 Pay to all what is due them—taxes to whom taxes are due, revenue to whom revenue is due, respect to whom respect is due, honor to whom honor is due. (Romans 13.5-7)

Many Christians throughout history have followed this lead.

On the other hand, the prophet John who wrote the Book of Revelation fantasized about a future when God would throw the into a lake of fire. He probably didn’t feel great about ponying up tax money. To him and other early Christians, Rome was “Babylon the Great,” with an unquenchable appetite for luxury and a hellishly unworthy cause for Christian money to support.

The Hebrew Scriptures (our Old Testament) form the backdrop for these early Christian attitudes. Ancient Israel featured four types of tax:

1. Mas/Forced Labor The modern Hebrew word for tax is mas, which originally meant more specifically forced labor. Israel’s government “charged” people time and work as a part of its demand on its people. E.g., in Solomon’s time, 30,000 men were conscripted to build the Temple. 2. The Royal Tax System Under Solomon, the land and its people were divided into twelve sections, each of which was responsible to provide supplies to the king and his family for one month of the year. (1 Kings 4.7-19) Conveniently for a king who reigned from Judah, that section of Israel was not counted as a district, so the rest of the nation foot the bill for the king and his officials, while his nearest locals weren’t charged. (No wonder the 10 northern tribes went out on their own after Solomon.) 3. Emergency Tribute Levy Some special occasions demanded immediate funding, and Israel’s tax habit met those needs. Mentioned only a few times in scripture, this method often called upon the well-to-do to foot most of the bill. (E.g., 2 Kings 15.19-20; 2 Kings 23.33-

Taxation 7 Courageous Conversation 14 OCT 18 © Allen Hilton 35 – Ancient Greece did something of the sort with its wealthier citizens. It is a mainstay of development strategies. 4. Head/ Israel charged a tax to every citizen, amounting to a half shekel (Exodus 30.11-16) or one third of a shekel in the Persian period (.32-39) Notice that the same amount was required of each payer, with no nod to level of means or ability to pay. 5. Sabbatical/Jubilee Year + Gleaning Rights The famous sabbatical and gleaning laws functioned as a tax, in that it mandated financial advantage to poorer and disadvantage to richer ones. In the 7th year, land is left to be harvested by the poor (gleaning), and every 7th year slaves are manumitted by the government’s mandate. Scholars debate whether the Jubilee year ever made it into Israel’s practice, but according to its ideal every 50th year, all land should revert to its original owners. (Exodus 23.10-11; Leviticus 25.2-7, 8-17, 23-25) 6. and Other Offerings The priests’ salary was paid through an of first fruits of the crops and a part of the meat from animal sacrifices, as each family presented them at the place of worship. (Deuteronomy 18.1-8) 7. The was ten percent of the total produce and cattle-breeding. While Moses’ setting was nomadic, the Law envisioned an agrarian context and demanded that faithful Israel dedicate a tenth to the religious and governmental governing authorities. ( to high priest Melchizadek in Gen 14.20; to God in 28.22; Samuel warns that kings will raise the tithe for themselves in 1 Samuel 8.15, 17;

In the language of our present-day debates about taxation, Israel’s programs cover three categories:

o the head and poll tax and the tithe are flat taxes; o the emergency tribute levy and sabbatical-jubilee-gleanings are graduated or progressive taxes (the rich pay a higher percentage); o and the Royal Tax System is a flat tax on groups, regardless of their sections’ relative size.

In other words, there really is nothing new under the sun!

“Like Death and…”: The History of Taxation

Cliches arise from truths. “Close only counts in horseshoes and shaving” nails the sad truth that losing a game by a few points is still losing a game. “The grass is always greener on the other side of the fence” strikes a chord of familiarity with us all, as we occasionally long for our neighbor’s life. And so it goes with “Tis impossible to be sure of anything but death and taxes,” a truism first spoken by Christopher Bullock in The Cobbler (1716) and paraphrased by Benjamin Franklin in a

Taxation 8 Courageous Conversation 14 OCT 18 © Allen Hilton 1789 letter to his French friend, Jean-Baptiste LeRoy. The sun comes up in the morning and the IRS summons on April 15.

Formally or informally, governments have required revenue throughout human history. Taxation of any sort like our own entered known history 5000 years ago in Egypt. Pharaohs of the First Dynasty demanded a tithe from their people every second year. It shows up in Genesis 47.24, where the Pharaoh’s tithe was one fifth of crop yield, and (as we know from other documents) anyone who could not pay the tithe owes Pharaoh labor (corvee) in the place of produce. The idea caught on (said he with British understatement).

For our present conversation, the most relevant part of the long history of taxation is the way local, state, and federal governments of the have raised revenue in our 242 years as a nation. But part of what fomented the revolution in the first place happened before those years.

Period One – Colonial Times

1764 The Sugar Act on imports of sugar, cloth and coffee – none of which came from Britain. 1765 The on all legal documents along with other frequent paper purchases. It is to this Act that colonists responded with complaints about “taxation without representation”. 1767 The Townshend Act taxing imports to the American colonies on common goods. 1773 The Tea Act gave rise to the 1775 Boston Tea Party.

Period Two – The Early Republic

The US Constitution both gives the federal government the power to tax its citizens and limits that power:

Representatives and direct taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers... (Article 1, Section 2, Clause 3)

The Congress shall have Power to lay and collect Taxes, Duties, Imposts and , 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 I, Section 8, Clause 1) No Capitation, or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration herein before directed to be taken. (Article I, Section 9, Clause 4)

Taxation 9 Courageous Conversation 14 OCT 18 © Allen Hilton In the early decades of the Republic, as the new nation hoped to clear its debts, tariffs on imported goods provided a large share of the government’s revenues. There was no federal .

Period Three – The Income Tax Era

The federal income tax feels to most 21st century Americans like it has always existed. But the practice arrived in three main episodes:

o Civil War Income Tax (1861). The first federal income tax was first levied to raise money for the union forces as they waged war. o The practice arose again in 1894, only to be thwarted a year later by a Supreme Court majority in US v Pollock (1895). o The 16th Amendment (1913) states: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

Since the 16th Amendment was ratified, the federal income tax has become a fixture in the revenue plan of the U.S. government under both Democratic and Republican administrations and congresses

The Canons of Taxation

In the 18th century, the father of capitalism, , named four principles that should govern our approach to taxation. In the time since Smith listed those four, others have added five more to produce a list of nine.

Adam Smith’s Four Canons are these:

1. The Canon of Equity Taxes should be levied according to the ability of the payers. One way this canon gets paraphrased is, “Stronger shoulders carry greater burdens.” In current parlance, a “” charges greater percentages of those who earn more money.

2. The Canon of Certainty The statutes should be easily understood and reliable, so that taxpayers can know what tax they must pay, along with when and how they must pay it.

3. The Canon of Convenience The tax should be levied at a time (relative to earning) when it is possible for the payer to pay.

4. The Canon of Economy The process of collecting taxes should not be over costly.

Taxation 10 Courageous Conversation 14 OCT 18 © Allen Hilton

To Smith’s list, over time, others have added 5 other canons.

5. The Canon of Productivity Taxes should be levied in a way that considers the productivity of the taxed – both individuals and groups.

6. The Canon of Elasticity The tax system should have a capacity to respond quickly to the changes in demand for revenue.

7. The Canon of Simplicity The tax system should not be overcomplicated, lest it prompt error and encourage or default.

8. The Canon of Diversity Tax should be levied on a range of incomes, goods, and services, thus diversifying the revenue portfolio and distributing the burden across the population.

9. The Canon of Desirability. No one deeply yearns to pay any tax. But the public can sense when a tax is valid and defensible, and when it is not. This canon keeps the government’s eye on the attitude of the governed.

International Context

At a time when Americans debate nationalism vs internationalism, what other nations around the world do will matter much to some, little to others. But here are the numbers: according to the Pew Research Center, the US ranks 34th, 22nd, and 30th among the 35 OECD (the Organization of Economic Cooperation and Development) in three categories of national/federal taxation. (2015 numbers) A caveat: the OECD data don’t include taxes paid at the state, provincial or local level (such as sales and taxes in the U.S.), nor do they include other national taxes, such as gasoline and cigarette taxes in the U.S. or value-added taxes in dozens of other countries. And they include only the individual portion of social-insurance taxes, not anything paid by employers. (In the U.S., for instance, employers and workers both pay Social Security and taxes.)

Taxation 11 Courageous Conversation 14 OCT 18 © Allen Hilton http://www.pewresearch.org/fact-tank/2017/10/24/among-developed-nations-americans-tax- bills-are-below-average/ft_15-03-27_taxoecd_2013_v2/

A Final Word – The Takeaway

Our Courageous Conversations help us accomplish many purposes. It is crucial, though, that their impact does not end when we leave the room. Group conversations help us change habits in ways that make us better at individual ones. And each topic continues to be relevant after we finish our 75 minutes together. To make sure impact continues, we finish each conversation with “The Takeaway”. What did we learn that matters for our lives, whether about how to talk or about how to think about the topic. We want to leave better. God help us!

Taxation 12 Courageous Conversation 14 OCT 18 © Allen Hilton Resources for Further Inquiry

Kimberly Amadeo, “Trump’s Tax Plan and How It Affects You,” The Balance 28 Sept 2018 https://www.thebalance.com/trump-s-tax-plan-how-it-affects-you-4113968

Richard Baron, “The Ethics of Taxation,” in Philosophy Now: A Magazine of Ideas (Issue 90, 2012) https://philosophynow.org/issues/90/The_Ethics_of_Taxation

Robert Frank, “How to Tax the Rich: A Lesson from Ancient Greece” WSJ 1 May 2012. https://blogs.wsj.com/wealth/2012/03/01/how-to-tax-the-rich-a-lesson-from-ancient-greece/

Barbara Fried, “Taxation” in the Philosophy Talk podcast. https://www.philosophytalk.org/shows/taxation

Robert A. Oden, “Taxation in Biblical Israel”, http://www.michaelsheiser.com/TheNakedBible/Taxation%20in%20biblical%20Israel.pdf

Grover Norquist, End the IRS before It Ends Us: How to Restore a Low-Tax, High Growth, Wealthy America. (2015).

Eduardo Porter, “The Great American Tax Debate,” NYT 18 Sept 2012 https://www.nytimes.com/2012/09/19/business/the-great-american-tax-debate.html

Jonathan Sachs, The Price of Civilization: Reawakening American Virtue and Prosperity. (2012)

Sondra Wheeler, Wealth as Peril and Obligation: The New Testament on Possessions. (1995)

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