The tradition of Catholic social teaching and what a just and loving approach to taxation might look like.
Gareth Rowe
CAFOD, Durham research fellow
Anna Rowlands
St. Hilda Professor of Catholic Social Thought and Practice, University of Durham.
“The council exhorts Christians, as citizens of two cities, to strive to discharge their earthly duties conscientiously and in response to the Gospel spirit. They are mistaken who, knowing that they have here
no abiding city but seek one which is to come, think that they may therefore shirk their earthly responsibilities. For they are forgetting that by the faith itself they are more obligated than ever to measure up to these duties, each according to their proper vocation.” (Gaudium et Spes 43)
The question of taxation and its ethics is a concrete concern that wins and loses elections, motivates heated public debate and is a matter of personal vested interest for any citizen. The task of this chapter is to look to the tradition of Catholic social teaching for assistance and inspiration in working out what a just and loving approach to taxation might look like. It will explore, briefly, some of the wider context in which such a discussion is placed and then offer a careful, sober reading of the encyclicals and key texts of the tradition on the question of taxation.
Taxation is the name we give to the process by which a government levies charges on its population for the purpose of raising public revenue to finance expenditure. Taxation provides for the economy of public life – the provision of infrastructure, services and investment in human capital. It is a form of economic exchange between citizen and temporal authority (government) for the sake of the creation and maintenance of a polity. In this sense, the question of taxation sits within the wider context of what the Catholic social teaching tradition has to say about the moral purpose of a polity (the common good), the nature of just economic exchanges and the basis of human dignity.
The basic anthropology of Catholic social teaching insists that human beings are dignified persons who are created out of love and with a divine purpose. We reach our purpose, destiny or end as human persons by learning how to live lives of solidarity and care for others, as well as by expressing the excellence of which each unique person is capable. Our origins are social (the divine unity of persons in the Trinity); our nature is social (we cannot achieve the goods we most yearn for in life alone but only in relationship to or with others); and our destiny is social (blissful union with God and the communion of saints at the end of time). The life of association, collaboration and social creativity is part of our nature and expresses our purpose. This is partly what we mean The basic anthropology of Catholic social teaching insists that human beings are dignified persons who are created out of love and with a divine purpose. We reach our purpose, destiny or end as human persons by learning how to live lives of solidarity and care for others, as well as by expressing the excellence of which each unique person is capable. Our origins are social (the divine unity of persons in the Trinity); our nature is social (we cannot achieve the goods we most yearn for in life alone but only in relationship to or with others); and our destiny is social (blissful union with God and the communion of saints at the end of time). The life of association, collaboration and social creativity is part of our nature and expresses our purpose. This is partly what we mean when we say there is a common good for which we strive: this phrase operates, as we can see from what we have just said, at numerous levels.
The question of taxation, therefore, is more than a mere technical calculation of self-interest or a narrow transaction between citizens and the state.
For these reasons, taxation has raised important moral questions for Catholics. Such questions have inspired radical action on the part of some: famously, Dorothy Day made a clear distinction in the twentieth-century Catholic Worker Movement between just and unjust taxation. She would pay local forms of taxation which enable the infrastructure of local common life, but she withheld federal taxes from the central US government on the basis that the purposes for which that tax revenue was used included military funding of which she did not approve. The question for Day was “what kind of polity is my taxation revenue being used to create?” She appeared before court hearings and wrote at length in her Catholic Worker newspaper about the grounds for her refusal to pay tax, and she did so by drawing on Catholic social thought. Her view of taxation was anything but transactional – it was about the covenant between the person and the polity. In a later part of the Catholic social teaching tradition, under Pope Benedict XVI, a version of this question is raised through a consideration of ‘fiscal subsidiarity’. This is not a refusal of taxation demands, but raises the question, in line with Day, about the role of citizens in formulating moral judgements and decisions about the raising and use of taxation – the question of the role of citizens in determining the focus, purpose and use of publicly-generated revenue.
We shall explore below the official Catholic social teaching which has attempted to offer a balanced appraisal of the question of taxation. Drawing on a wider teaching on justice from the Thomistic tradition (that justice is contributive, distributive and commutative) enables the encyclicals to make certain assumptions. Our duties in justice include the following: making an active contribution to the societies in which we live and seeing ourselves as personally responsible for their just conduct; ensuring that there is a balance of benefits and burdens in a society such that those who face particular vulnerabilities are cared for and do not face unfair burdens; and that the manner in which taxation might fall does not place greater burden for maintaining a polity on the poorer members. This would seem to imply that regressive taxation systems could not really be justified.
Justice also implies that the basic needs of the human person can be met through the organisation of a society. Thus, all must have food, shelter, health, education and work. Being able to work, under fair conditions, to provide for yourself and your family in an adequate manner is part of a dignified existence. Contributing from the bounty, beyond meeting immediate material and moral needs, to the common good, to ensure that the material and morals needs of all are met, is part of a just order. This understanding can also be drawn from the Catholic Church’s teaching on the universal destination of goods: that the goods of the earth are intended for the benefit of all, such that there is an abundance in the world that, if fairly stewarded and managed, can – and should – provide for all. Taxation might be part of ensuring that goods are distributed, or, if things have become skewed, redistributed towards a genuine universal destination. Commutative justice emphasises fairness of person-to-person exchange.
Having outlined a little of the wider context, we move now to a more specific consideration of the Church’s social encyclical tradition and certain Bishops’ Conference letters that address the question of taxation directly.
We have started this chapter with a broad definition of how taxation is understood within a culture. The Catholic social teaching tradition has its own specific language to describe this. In 2004, the Bishops of England and Wales defined taxation in relation to the Catholic social teaching tradition in the following way: “Taxes, whether direct (for example, income tax) or indirect (for example, Value Added Tax) are a vehicle through which we, as responsible citizens, work with government to promote the common good.”16 How were the Bishops able to develop such a definition and what are the implications of this definition for the future of taxation as an ethical concern?
When the religious authorities of the day tried to trap Jesus into making a radical, anti-imperial statement, tax was the lever they chose. After asking them whose face is on the imperial coinage, Jesus observed that they should “render to Caesar the things that are Caesar’s, and to God the things that are God’s.”17 By using a balanced statement in this way, Jesus affirms the legitimacy of temporal authority and its right to levy taxation but makes it clear that this right is not absolute; only the claims of God are absolute.18 This balancing of the liberty of political authority with the freedom of the human person under God sits behind the encyclical tradition in the post-Vatican II era. Three years prior to the publication of Rerum Novarum in 1891, Pope Leo XIII examined the nature of human liberty directly. He stated that, while liberty did not consist in individuals doing as they please, neither did it allow “those who are in authority… to lay unreasonable and capricious commands upon their subjects”.19 This balance is noticeable in the encyclicals prior to the Second Vatican Council in which discussion of taxation is always subsumed under wider teaching.
Rerum Novarum, usually taken to be the first social encyclical, does not treat taxation directly but includes it in a discussion of private property. The encyclical balances the interests of the worker and the owner.20 It acknowledges that, under the conditions of that time, these were likely to be different people: there is a “wide chasm” between the worker and the owner of wealth.21 However, the encyclical proposes that workers themselves become owners through thrift, saving and investing from their wages, and notes that this is only possible if taxation is not excessive. It suggests three benefits will arise from this: a convergence between the classes and reduction in wealth disparity, incentivising of an increase in productivity, and reduced economic migration. Thus, Rerum Novarum’s key teaching in relation to tax is that it is to be moderate and fair.22 Taxation is only conceived of negatively as a drain on resources – principally workers’ pay – in the document. It never goes beyond this to consider taxation as a positive tool to bring about the redistribution of wealth.
Neither of the two subsequent social encyclicals explicitly go beyond Rerum Novarum’s understanding of taxation. Both are redolent of their times. Quadragesimo Anno (1931) seeks to steer a course between ‘individualism’ and ‘collectivism’ and sees, under both capitalism and communism, a hollowing out of civil society and the emergence of an overweening state which undermine the common good as understood by St Thomas Aquinas.23 It repeats Leo XIII’s teaching on the inadmissibility of excessive taxation but does so in more hyperbolic language.24 Yet it also allows the state the right to bring “private ownership into harmony with the needs of the common good”, thereby perhaps opening the door to progressive taxation.25 Thirty years later, the main contribution of Mater et Magistra (1961) to the tradition’s understanding of tax is its clear articulation of the principle that “the burdens [of taxation] be proportioned to the capacity of the people contributing”, but it does so in the context of an increasingly wide gap between the city and the countryside and concern for the higher risks and vulnerabilities faced by farmers.26
In these early encyclicals, taxation is conceived of only on a national level: within countries. Only after the Second Vatican Council does the tradition begin to consider taxation in the light of disparities between countries.
Populorum Progressio (1967) sets taxation in the light of international development. It suggests how taxation could be used to reduce economic disparities between countries, essentially making the same suggestion twice but viewing it through two different lenses. Firstly, it uses the pragmatic lens of revenue generation: it challenges people in wealthier countries to accept higher levels of taxation so that their governments have the revenue needed to engage in international development.27 Secondly, it uses a moral lens through which the worth of different goods is viewed, suggesting that it is “luxuries and… wasteful expenditures” that should be taxed in order to promote development and peace.28 Here, the tradition begins to explore targeted taxation, recognising that unnecessary expenditure could be taxed at a punitive rate. Although not further developed in the encyclical, there is also, perhaps, the suggestion of promoting behavioural change by such taxation.
The idea that taxation could be used to effect an international redistribution of income or wealth reaches its apogee in the 1971 World Synod of Catholic Bishops’ document Justice in the World which calls for “a graduated taxation of income as well as for an economic and social plan for the entire world”.29
This suggestion is made during the height of the social democratic era which followed the Second World War, a period in which nation-states around the world were actively using progressive taxation to promote social change. By 2009 the world was very different. The encyclical Caritas in Veritate, published not long after the early events of the global financial crisis, restricts itself to a single mention of taxation: “fiscal subsidiarity”.30 This is the idea that taxpayers can decide how the state spends a proportion of the money they pay in taxes.
The US Conference of Catholic Bishops published a pastoral letter called Economic Justice for All in 1986. It is one of the most comprehensive treatments of taxation within a single church document in the twentieth century. This set taxation in the wider context of justice in the US and world economy. A central theme of the document is the preferential option of the poor which, it states, should be “the central priority for policy choice”.31 The document both develops the thinking on taxation found in earlier texts and also makes more specific suggestions as to what an ideal tax system would look like under present conditions. A key contribution of the letter is the claim that “the tax system should be continually evaluated in terms of its impact on the poor”.32 It sets out three principles to guide this evaluation. Firstly, the tax system should raise enough revenue to meet the needs of society and especially the poor. Secondly, tax should be progressive with the greatest burden on those most able to pay. Thirdly, no income taxes should be paid by the poorest families.33 Despite this focus on a tax system based on the ability to pay and the needs of the poorest,34 the letter retains the balance of the encyclicals by noting that business can serve society under the right tax system, especially by preserving the environment, employing the disadvantaged and creating jobs.35
The Committee for Public Life of the Catholic Bishops’ Conference of England and Wales published Taxation for the Common Good in April 2004. It examined UK taxation in some considerable detail. Its central thesis was that “in principle, taxation is neither a burden nor a necessary evil, but… a positive contribution to the common good, a responsibility of citizenship.”36 This represents a further development of the tradition and provides the most coherent grounding in the Catholic social teaching tradition to date. After acknowledging that taxes in ancient and mediaeval times were often punitive and used to fund armies, it goes on to recognise a human vocation to live together in society and grounds modern taxation in this vocation.37 Taxation, it says, should embody the values of solidarity and justice. It notes how supposedly private profit is, in reality, dependent on public goods such as education and roads, and notes that taxation provides distributive justice which helps to ensure the dignity of the person.38 The document also reminds us that the common good demands that the needs of future generations are taken into account.39 This focus on the future, and inter-generational responsibilities, perhaps indicates how the tradition is currently developing.
None of the major documents of Pope Francis treat taxation directly.40 What should we make of this absence? The Catholic social teaching tradition is contextual, seeking to apply Church teaching to the social problems of the present day. We see this in the development sketched out here from a first intra-national phase, which treats tax in the context of labour and capital, through a second international phase
which focuses on international development. We can also see a development in the tradition from seeing tax negatively as a necessary burden to seeing it as a positive tool to promote the common good.
In the apostolic exhortation, Evangelii Gaudium (2013), Pope Francis spoke of a polyhedral globalisation which balanced global convergence with local distinctiveness.41 Here, the common good is conceived
integrally as a reconciled diversity of the global and the local. In his encyclical Laudato Si’ (2015), Pope Francis characterised the earth as “our common home”.42 The encyclical describes a combined environmental and social crisis which threatens the common good of the earth and its peoples.43
Although the encyclical does not treat taxation directly, taxation has clear implications for this global common good. Of the two parts of the crisis, the implications of taxation for the social element have been addressed throughout the tradition. This now needs to be supplemented by the environmental aspects. There is a growing awareness of the importance of green fiscal policy in secular thought through,
for example, contributing towards the Sustainable Development Goals promoted by the United Nations. Such thought already evokes a key strand of the Catholic social teaching tradition – the preferential
option for the poor – through its focus on reducing vulnerability to environmental degradation, alleviating poverty through investment in health, education and infrastructure, and reducing inequality.44
There has also been much discussion in the social sciences, over the decades, of taxes designed to reflect environmental harms caused by consumers or producers. This is reflected in Laudato Si’. Quoting earlier encyclical, Caritas in Veritate, Pope Francis mentions that the economic and social costs imposed on others by the using-up of shared environmental resources should be borne by people who take those
decisions and not by other people or by future generations.45 Elsewhere, Laudato Si’ also mentions the “obligation of those who cause pollution to assume its costs”.46 These are not purely questions of economic efficiency. The principles of distributive justice point in the direction of the use of mechanisms, including taxes, to ensure that people bear the cost of their behaviour when it comes to the exploitation of environmental resources. The use of taxes in this way still allows decision-making to take place at lower levels in society whilst people are guided in such a way that they promote the nurturing of environmental
goods.
As the third phase develops, Catholic social thought and teaching has much more to contribute to illuminating questions related to taxation. It provides a coherent set of principles ordered to the common good which can inform specific proposals right now, such as progressive taxation, inclusion of the poor
and inter-generational solidarity.47 But Catholic social thought and teaching also remain open to transcendence and the possibility of another world where things are done differently.48 To borrow the political economist Luigino Bruni’s eloquent definition of the civil economy tradition, Catholic social teaching “is not that alternate system, neither in thought nor practice. It is, however, a laboratory of thought and practice in which we can attempt to imagine it.”49
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Chapter Two: Taxation in Catholic Scholastic Thought >
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16. Committee for Public Life, Catholic Bishops’ Conference of England and Wales, Taxation for the Common Good (2004) 17.
17. Mark 12:17 (ESV) cf. Matthew 22:15-22; Luke 20:20-26.
18. Pontifical Council for Justice and Peace, Compendium of the Social Doctrine of the Church (2004) 379.
19. Pope Leo XIII, Libertas Praetanstantissimum (1888) 10.
20. See Pope Leo XIII, Rerum Novarum (1891) 20: “[T]he employer must never tax his work people beyond their strength”; and Ibid 47: “The State would therefore be unjust and cruel if under the name of taxation it were to deprive the private owner of more than is fair.”
21. Ibid 47.
22. Ibid 32.
23. Pope Pius XI, Quadragesimo Anno (1931) 46; 112; 83-84.
24. Compare Pope Leo XIII, Rerum Novarum (1891) 47: “a man’s means be not drained and exhausted by excessive taxation” and Pope Pius XI, Quadragesimo Anno (1931) 49: “it is grossly unjust for a State to exhaust private wealth through the weight of imposts and taxes.”
25. Pope Pius XI, Quadragesimo Anno (1931) 49.
26. Pope John XXIII, Mater et Magistra (1961) 132.
27. Pope Paul VI, Populorum Progressio (1967) 47.
28. Ibid 84.
29. World Synod of Catholic Bishops, Justice in the World (1971) 66.
30. Pope Benedict XVI, Caritas in Veritate (2009) 60.
31. United States Conference of Catholic Bishops, Economic Justice for All (1986) 260.
32. Ibid 202.
33. Ibid.
34. Ibid 76.
35. Ibid 117-118.
36. Committee for Public Life, Catholic Bishops’ Conference of England & Wales, Taxation for the Common Good (2004)173.
37. Ibid 4-6; 13.
38. Ibid 23; 30.
39. Ibid 25.
40. There is a passing reference to “tax evasion” in Pope Francis, Evangelii Gaudium (2013) 56 under the subtitle, “No to the new idolatry of money”
41. Pope Francis, Evangelii Gaudium (2013) 236.
42. Pope Francis, Laudato Si’ (2015) 1.
43. Ibid 139.
44. For example, see the Green Fiscal Policy course available on the One UN Climate Change e-learn website.
45. Pope Francis, Laudato Si’ (2015) 195 cf. Pope Benedict XVI, Caritas in Veritate (2009) 50.
46. Pope Francis, Laudato Si’ (2015) 167.
47. Committee for Public Life, Catholic Bishops’ Conference of England & Wales, Taxation for the Common Good (2004) 24; 25; 141.
48. Anna Rowlands, Towards a Politics of Communion: Catholic Social Teaching in Dark Times (2021) p. 4.
49. L. Bruni and S. Zamagni, Civil economy: another idea of the market (2016) p. 4.
The Catechism of the Catholic Church tells us that individuals and companies have a responsibility for the common good, and thus it is morally obligatory to pay taxes that are due.
The framing question for this reflection is whether addressing the national debt from the response to Covid-19 will require cutbacks in expenditure or increased taxation or both
The late Pope Francis drew attention to the problems associated with a system that fosters inequality
All individuals, families, civil society organisations and corporations, as well as the state, are responsible for promoting the common good and solidarity.
