January 26, 2006
Livingston on Religious Approaches to the Progressive Income Tax
Posted by Victor Fleischer

Today at our Tax Policy Colloquium, Michael Livingston (Rutgers-Camden) presents Rendering Unto Caesar: Religious Approaches to the Progressive Income Tax.  Livingston examines the ways in which some scholars and religious organizations argue against (or in favor of) progressivity based on appeals to religious texts or traditions.  His main takeaway, I think, is that the concern that appeals to faith will displace appeals to reason is overstated.  The methods, he argues, are similar to traditional methods of arguing about progressivity. 

"While tracing their positions back to Biblical verses or at very least to Biblical principles, the various denominations tend to develop these ideas in a matter---interpretation, argument, the weighing of different sources and the effect of changed circumstances---not especially different from methods used by secular scholars in applying secular texts." 

For those who are interested, my comments follow below the fold. 

Livingston impressively surveys a wide range of religious arguments for and against progressivity.  After reading the paper, however, I'm not convinced that religious arguments usefully contribute to tax policy debates. 

Conclusion One.  Livingston draws three conclusions.  First, he concludes that most religious commentary on progressive taxation is underdeveloped and non-specific in character.  His evidence here is quite convincing.

Conclusion Two.  Second, he concludes that there is a surprising consistency between superficially opposing religious viewpoints.  Here he argues, based on common appeals to simplicity, horizontal equity, and support of families and working people, that

"A broad overhaul of the current tax system to impose (say) a modest level of progressivity and eliminate many of the existing credits and deductions (though not that for charitable contributions) might satisfy a surprising number of these critics regardless of denominational affiliation."

On this point I'm not convinced.  The tax reform panel recently proposed an overhaul of the system that would have retained the current modest level of progressivity and eliminated many deductions and simplified the credit system.  It satisfied almost no one except for scholars.  More on this in a minute.

Conclusion Three.  Third, as noted above, he concludes that the concern that appeals to faith will displace appeals to reason is overstated.  He is certainly right that many religious commentators use somewhat similar methods of textual interpretation to secular scholars.  It's not just blind faith or simplistic appeals to text taken out of context.  But I question whether such methods will advance the ball in the tax policy world. 

GORP.  Livingston presents the paper as a test case for the use of religious criteria in public policy.  It is, indeed, a useful test case.  But to me the evidence cuts the other way.  The indeterminacy of religious arguments (Livingston's first conclusion) cuts against his argument that religious criteria can be useful.  Many religious commentators use scripture and religious tradition like judges use legislative history, fumbling through trail mix to pick out the M&Ms.  (Among hikers it's considered unseemly to pick out the M&Ms from the mix of peanuts, raisins and granola.) 

Tax Reform.  Consider the reaction to the tax reform panel, and in particular, the reaction to the panel's proposed elimination of the state and local deduction and the conversion of the home mortgage interest deduction to a capped credit.  After reading Livingston's paper, you might think that both the right and the left would have embraced the reforms.  But the evidence suggests otherwise.  In Harlem, where black churches are a powerful force in the community, we heard opposition to the repeal of the state and local deduction.  From the right, where the religious right holds some influence, we heard opposition to the limitations on the home mortgage interest deduction.  Politicians will not hesitate to appeal to religious text and tradition when it supports a policy preference they already hold, but for the most part the indeterminacy of religious text prevents it from translating into concrete policy positions.  Maybe this is just evidence that people vote their pocketbooks, and not their religion.  But recent elections show the importance of ideology; what I'm arguing is that I'm not convinced that appeals to religious texts meaningfully shape the debate where the rubber meets the road.  The tax ideology is coming from someplace else.

Economics vs. Religion.  Livingston argues that economic arguments about progressivity are really no different from religious arguments, i.e. that they are both arguments about human behavior and the requirements of a just and good society.  This is where I disagree.  There is a difference between the question of redistribution and the question of designing a progressive tax system.   In part, it's the inability of religious texts to speak to the modern questions, such as whether to have a progressive income tax or a progressive consumption tax, or how we should tax a profits interest in a partnership, or whether a zero tax rate on derivatives is appropriate. 

Many tax policy scholars -- at least the articles that I find most useful -- cabin off the question of redistribution.  That's a question for religion and politics to sort out, and people can vote their preferences at the polls.  Instead, tax policy should concentrate on what it does best.  Assuming some level of redistribution, how should we get there?  Should we have progressive marginal rates?  Or should we have declining marginal rates coupled with a demogrant?  Should we tax capital income? 

Is Economics a Religion?  There is no question that one needs a theory of distributive justice to form a complete picture of tax policy.  Some people may derive that theory from religious faith, others from philosophy.  I have no problem with those who derive their preferences from religious faith.  As a matter of scholarly discourse, I find it more useful to concentrate on the philosophy side.  And even within philosophy, convincing others that one approach is better than another feels to me like trying to convert someone to another faith.  As a tax policy scholar, I have no comparative advantage here.   

Implicitly I'm arguing that traditional tools of tax policy, including public finance economics, can sometimes lead us to demonstrably right and wrong answers about the design of a tax system.  I am a skeptic about the ability of law professors to convince anyone that the top marginal rate should be 35% by appealing to Rawls OR the Bible.  But I do I have a lot of faith, so to speak, in tax law scholarship and economics to speak to the proper design of the system. 

[Note: I'm leaving comments open for now, but I reserve the right to delete anything uncivil or inflammatory.]

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" Vic Fleischer had a really interesting post on religion and tax policy over at a Conglomerate that ..." [more] (Tracked on January 30, 2006 @ 9:20)
» "Religious Arguments in the Law" or "Reasoning in God's Presence" from Concurring Opinions ...
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