The Federal Tax Code and the codes of those states that have policies that are similar to the federal code are almost impossible to understand. The IRS when giving advice to taxpayers concerning the code clearly say that if the representative of the IRS who gives advice to a tax payer gives the wrong advice the tax payer is still responsible for payment, interest and penalties if that tax payer follows the advice that representative and the advice proves to be wrong. I experienced this curious problem when seeking advice from the IRS. In three different phone calls representatives of the IRS gave three different answers.
However the biggest problem with the current Federal Tax Code is that it penalizes some taxpayers and rewards others.
Here is an example for pastors. A pastor who owns a house can take a deduction just like anyone else on the interest paid on the mortgage. But the pastor can also deduct part or the entire amount paid in a housing allowance including the full cost of that same mortgage; both the interest and the principle. This puts pastors (and members of the military who own their houses) in the curious position of being able to take deductions for the same expense (the interest on mortgages) twice. Other citizens do not have this benefit.
Large corporations have deductions and credits. Oil companies, despite their huge profits over the past few years, are allowed tax credits.
The list goes on and on. One of the reasons it is so difficult to prepare one's own tax reporting is that the Tax Code is so complicated.
Why does Congress allow such deductions and credits? Through tax policy Congress seeks to reward certain groups and thus set public policy through deductions and credits. Further lobbyists for corporations and groups of citizens influence Congress to provide tax relief for the people and corporations that they represent tax relief at the expense of others. This often has the curious result that a person who earns much more in salary, bonuses, investment income and capital gains than a person in the middle class may pay less taxes that that same person in the middle class.
It is time to stop such social engineering. If a government is going to be just taxes paid by any individual or corporation must be fair and not benefit one group of people or corporations at the expense of others. If Christians seek to influence governments to provide justice by law tax law must do the same. The basis for such Christians attempt to influence governments is based in the attempt by Christian to make this world as much like the Kingdom of God as possible. In the Kingdom of God there is equality for all people. Thus for the Christian a tax code must be equitable. Without an equitable tax code there is no justice
The government has the further problem that the debt owed by the government is astounding and growing every day. Just as families and most states in the USA have to balance their budgets so should Congress and the IRS.
I therefore submit the following suggestions for equity in taxes equity based on the fairness and justice proposed for the Kingdom of God
1. That FICA taxes be paid on all income from salaries and bonuses earned by all people. At the present time those who earn more than a certain amount pay FICA taxes only on a part of their income. The cap on earned income is currently $106,800.00. Anyone who earns more than this pays FICA taxes only on this portion of their income. The given reason for this cap is that those who earn more than this amount will never receive a proportional return on their FICA taxes. But FICA has never given a specific amount of money to any retired person or couple. If an individual or both people in a couple die at the relatively young age of 70 neither they nor their heirs will ever receive back all the moneys put into FICA taxes by them or their employers. Given the current crises in Medicare and Social Security payments on all income and bonuses would go a long way to providing more income to Medicare and Social Security.
2. Remove all deductions and credits. Deductions and credits provide lower taxes to a portion of individuals and corporations at the expense of others. Some of these deductions and credits are encouraged by lobbyists who help members of congress get reelected by encouraging individuals, corporations and unions to give to or support a candidate. This is a blatant conflict of interest. Further deductions and credits are attempts at social engineering. The purpose of taxes is to pay the bills of the federal government not to change society.
3. After removing all deductions and credits graduated percentages of income would provide more income to the federal government. Persons and families who earn less than a certain amount should pay less tax. As income grows so should the percentage of income paid in taxes grow. Under the current system of deductions and credits the burden of taxes falls proportionately higher on the middle class.
Tax code should not be so confusing that an individual who has graduated from high school cannot understand how to pay his or her taxes. Complicated tax code only benefits a particular group of people in a particular business: those who prepare tax returns for others.
Justice required in Scripture demands that taxes be just. Christians should demand the same.