Online Course Unit 8

Taxation and the role of government

Robert G. Kennedy ABOUT THE AUTHOR


The question discussed in this chapter is how a system of taxation in modern government might take shape, in some respects at least, if it were informed by a Catholic vision. To do this, however, we need to be clear about the role that government ought to play in our common life and what justice means in the Catholic tradition.

The central political issue, as both a theoretical and practical problem, that has occupied Western culture in modern times (and indeed has helped to define modernity), is whether a virtuous population is a necessary condition for a just social order or whether a just social order can be designed and imposed on a population so that it becomes virtuous. The practical effects of this continuing debate have shaped most of the major conflicts and political upheavals of the last 250 years, from the American and French revolutions of the 18th century, through the rise of socialism in the 19th century, the emergence of Fascism and the Cold War in the 20th century and the cultural polarisation of the early 21st century. The position one takes inevitably shapes the answer to any question about the proper role of government in society.

The debate has deeper roots than is commonly imagined and in its current manifestation it is about a great deal more than how society can more fairly distribute the benefits of modernity. The American and French revolutions dramatically set the stage. On the one side, the American revolution sought to separate a small, colonial population from a great imperial power but at the same time to adapt a familiar form of government to the conditions of the New World. On the other side, the French revolution sought to overthrow an existing social and political order and to remake the culture as thoroughly as it could. In the first case, the founders of the American republic were realists determined to craft a political structure conformed to the population and indeterminate yet hopeful about what the people would make of it. In the second, the French republicans were determined to create a new social order and to force the population to conform to it. These two approaches, one focused on realistic initial conditions, the other on an ideal end state (and ruthless about pursuing it) describe the characteristic political options of modernity.

There is an argument to be made that both choices derive from a fuller and more robust vision of society offered by the Catholic social tradition but that both also exaggerate some aspects of this tradition at the expense of suppressing other important elements.

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Government and the common goods of society

John Courtney Murray, a prominent Jesuit theologian in the mid-twentieth century, once observed that “civil society is a need of human nature before it becomes the object of human choice.” (Courtney Murray, 1960, page 7). By this he meant that human society is not an artefact of deliberation but rather the result of a natural inclination in human beings to associate with one another and to take part of their identity from this association. That we have this inclination is one more manifestation of our nature as images of God, who is also intelligent, free, and social (God is a Trinity, after all).

This civil society is the social context in which most of us live our lives. It contains within it many forms of human association, including families, voluntary associations of all kinds, government bodies and, in some respects, the Church (which is a special kind of society).

Societies are capacious. They are the most comprehensive form of common life, containing the other forms of association as if they were organs within a body. This last point is important, as it marks the distinction between a naturally healthy society and one tending toward totalitarianism.

A healthy society is much more than an aggregate of individual members, each independently pursuing his or her own vision of fulfilment. Instead, the members of society find much of their identity and fulfilment in and through their participation in a rich array of social groups. In a healthy society the principal organs—families and voluntary associations—have proper functions that directly or indirectly serve the common good. These are functions that belong to them as natural communities (families, especially) or as deliberate associations, with chosen goals and operations.

One distinctive organ of society is government. No civil society can serve the needs of its members or remain stable without government. Even poor government, to a degree, is preferable to no government at all. Contrary to a famous observation by the American revolutionary Thomas Paine, government is not a “necessary evil” but its proper functioning is necessary to secure the common goods of civil society (Paine, 1776, ch. 1). Paine was right, though, to observe that governments do sometimes fail to perform well and that their proper functioning is so important to human well-being that failure demands a remedy.

It is important that government should be understood as an organ of society, neither identical with society nor superior to it. It is the organ through which society exercises authority in service of the common goods of social peace and civic friendship.[1] While government must be an integral part of any civil society, it is not and cannot be the whole, or responsible for every element of private and social life. In a healthy society, there is a great deal that ought to fall outside the ordinary concerns and activities of government, to be addressed by families and voluntary associations as their proper functions.[2]

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The proper function of government

If government is an organ of society, what then is its proper function? It is to establish and secure the instrumental common good of civil society. Every human association, whether temporary or enduring, is characterised by at least two kinds of common goods, one instrumental and one final[3]. An instrumental common good is a means, or an intermediate objective, that allows the members of an association to work toward its ultimate objectives, which are final goods.

In the case of civil society, the instrumental common good, which we might also call social peace, is, in St Augustine’s phrase, the “tranquility of order”. This ordering of society, in the words of Pope St John XXIII, “embraces the sum total of those conditions of social living whereby men are enabled more fully and more readily to achieve their own perfection.”[4] Of course, the goal to which this instrumental good is directed is the comprehensive flourishing of each and every member of the community, which is one of society’s final common goods.

We must note that this instrumental common good is a set of conditions, not a set of results. It is a critical part of human dignity—as every parent of a two-year-old knows—that we exercise agency, that we are not merely passive observers of life or always subjects of the agency of others. According to this view, which the Church has emphasised again and again, the proper and essential function of government in any society is to secure the conditions that make it possible for individuals to be agents on behalf of themselves, their families, their friends and their communities. It is not, in other words, the proper function of government to ensure outcomes but instead to establish justice and peace (and to provide remedies to violations of justice), to remove impediments to flourishing where possible and to provide certain kinds of support where needed.[5]

We also need to be clear about what human flourishing means. In his 1967 encyclical, Populorum progressio, Pope St Paul VI warned against understanding human flourishing simply in material terms, as if it were no more than a matter of production, possession, and consumption. Instead, influenced by the French philosopher, Jacques Maritain, he emphasised integral human development, “the good of every man and the whole man.”[6] Some years later, St John Paul II reminded us that the fundamental failure of socialism was “anthropological in nature”[7]. That is, it was grounded in a mistaken notion of the human person and, as a consequence, the objectives and functions that were assigned to government were often destructive, not supportive, of human flourishing.

The particular errors of socialism—reducing the person to “a molecule within the social organism”, conceiving of development in strictly material terms, denying the importance of agency and freedom—are hardly the only foundational errors that a culture can make.[8] Western cultures certainly make crucial errors of their own that have severely damaging effects on real persons and also result in misaligning government functions. The recognition of this, along with millennia of experience, should lead us to adopt a certain humility about how completely any government or any society can establish the common good.

What, then, would be a better foundation for society, what would be the components of a better and more authentic vision of the person? It might begin with the conviction that every human life, without exception, has an irreducible dignity that commands respect even from the powerful. It would recognise that human persons, by nature, are intelligent, social and able to choose freely. It should acknowledge that human lives are not enriched merely by material necessities but also by things of the spirit, by truth, goodness and beauty. It would respect the indispensable contribution of families, which nurture us and prepare us to be developed and enriched by our participation in voluntary associations and political communities. And it might, in exceptional cases, admit that each person has a transcendent destiny.

Such a foundational vision would shape and inform the proper functions that are the basic operations of government. By proper functions, we mean those that are directly related to the preservation of peace and the common good(s) of society; are vehicles through which society legitimately exercises authority over its members, to order and coordinate their activities; and are ordinarily reserved exclusively to the state.[9] A list of these functions can be easily compiled by considering the principal division of government operations into the legislative, the executive, and the judicial. Such a list would include determining the laws governing the community, enforcing those laws, diplomacy, defending the community, managing public resources and adjudication.

In most societies, however, the list of government functions does not end here. In a great many cases, especially in the modern context, societies choose to delegate a variety of functions to the state that have been previously performed by private associations. These delegated functions might include the administration of welfare benefits, formal education, the provision of medical care, construction and maintenance of transportation infrastructure, postal services, central banking, utilities, and public safety services. Quite often, the delegation is not exclusive, so that private associations may also continue to engage in these operations. The point, though, is that these delegations are choices, made by the society or by civil authorities. Having the government take on these functions may or may not be wise or prudent decisions, but given the democratic accountability of governments, they lie within the set of things that society, via the democratic process, can delegate to government. In this they differ from a third category of government functions.

The third category arises, in the author’s judgment, because of a subtle change in our understanding of what government is about. The Catholic social tradition, as I have suggested, understands that it is the objective of government operations to establish and secure the public conditions necessary for human flourishing. The third category embraces the idea that it is the responsibility of government to ensure outcomes. As a consequence, we see the emergence of assumed functions of government.

The Catholic tradition, at least since St Augustine in the fifth century, has long been sceptical about the possibility of perfecting the City of Man. Perhaps, Augustine speculated, if the City of Man were populated largely by saints some sort of perfection would be attainable, but since saints are never that numerous, human societies will always be corrupted.[10] As long as we are residents of the City of Man, however, we cannot be indifferent to the effects of culture on individuals.

In this regard, the Christian tradition has had a two-pronged strategy. It has sought, through its teaching and its sacraments, to immunise individuals against the worst of secular culture and to instil in them sound moral and spiritual habits. And through works of charity, it has sought to relieve personal suffering and to offer an example to inspire improvements in culture. In the end, the measure of its success is not in the conversion of cultures (though this would not be dismissed) but in the holiness of individuals.

In the past couple of centuries, however, a different vision has taken root in Western culture, most dramatically in the French Revolution of the 18th century and its imitators in the 20th century. One of the foundational commitments in these movements was the conviction that, in spite of the weaknesses and sinfulness of individuals, society itself could be perfected through the intelligent transformation of structures and practices and that the reformation of individuals would follow. To achieve this, it would be necessary to harness the authority and power of government, which alone could assemble the resources required for the project and exercise power to ensure its execution. Naturally, once launched in this direction, government would have to assume a variety of functions related to its new duties to ensure the proper outcomes.

So, where a Catholic conception of human dignity regarded the person as intelligent, free, and social, and therefore a responsible agent, this new conception of society began with an ideal social structure in mind and tasked government to build it and to fit individuals to a new order. It should be no surprise that this new order also required new forms of justice.

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Distributive and social justice

There are no more equivocal words in the field of social ethics than those associated with the concept of justice. It is no accident that Plato’s Republic begins with Socrates asking, “What is justice?” There have always been an array of answers to this question but the Western tradition commonly accepted the definition offered by the Roman jurist Ulpian: “the constant and perpetual will to give to each what is his”[11]. Justice, in other words, is at root a quality of the will by which a person is disposed to give to others what they deserve to have. It is a virtue that preserves a sort of equality and harmony between persons.

In the latter half of the 19th century, however, an alternate conception of justice was aggressively proposed, especially among economists and legal scholars in the Anglo-American tradition. Where the classical understanding was clear that justice is principally a quality of human actions and only secondarily an assessment of results, the new thinking reversed this priority. Justice became in the first place an evaluation of situations and conditions, particularly of those evident inequalities in society, while secondarily—and inescapably—a judgment about personal and collective responsibility. The difference is subtle but powerful.

In the classical tradition, it was quite possible to distinguish between unjust and unfortunate situations. Individuals and groups who suffered a serious injustice could usually identify the persons responsible and, in principle at least, could appeal to the legal system for a remedy. But experience teaches us that it is also often the case that individuals and groups may suffer from chance events—weather, earthquakes, disease, and so on—that do not result from anyone’s unjust actions.[12] The remedy for such situations in many societies is not recourse to the law but an outpouring of generosity and beneficence; a gift, not an act of reparation or restitution.

In the new way of thinking, however, differences of all sorts in society are presumed to be injustices, not merely misfortunes or the consequences of poor decisions made by the suffering themselves. Following this reasoning, such situations lead to calls for government action to supply a remedy (and often preventative measures, to guard against such situations arising again). Too often, then, challenges that could be addressed in a spirit of generosity and co-operation become occasions of conflict and accusation. In the context of our subject, this can be true with regard to issues of distributive justice and social justice, where taxation is promoted as a remedial tool, and so a closer examination of these terms is necessary.

The contemporary Catholic moral tradition has been affected by the secular controversies about justice. In recent decades, voices in this tradition have embraced one secular definition or another but the classical moral tradition, which was generally accepted until the middle of the 20th century, still provides the foundation for the Church’s teaching on matters of justice.[13]

This classical tradition, explored by Thomas Aquinas and many others, divides justice into two broad categories by considering first, who would be the objects of just actions (those whose interests must be considered), and second, the subjects, whose choices and actions should be shaped by the principles of justice. The first category of justice is particular justice, where the persons to whom something is owed can in principle be enumerated and identified. This could be a particular individual, the members of a distinct group, or even some of the members of a civil community.

Particular justice is further divided into two types. In the first, which is commonly called commutative justice, the persons who must act justly aim at preserving or restoring equality with others. If I receive a loaf of bread from a baker, for example, our relationship is unequal (unjust) until I give him a sum of money equal to the common value of the bread. Or if I damage my neighbour’s fence, our relationship is unequal until I repair the damage or otherwise compensate my neighbour.

But persons can also act in a very different capacity, as representatives of a group (whether a family, a voluntary association, or a civil society) charged with managing the resources and demands of the group with respect to the members. For example, the managers of a business must decide how to distribute the funds available for compensating employees. In order to act justly, they must treat employees who are alike in relevant respects in the same way, while they may, and often should, treat employees who are unlike others (more productive, greater responsibility) differently. This type of justice is called distributive justice.

And it is here that we encounter the first great source of confusion in contemporary discussions of justice. The classical (and we might say proper) understanding of distributive justice is that it always concerns the allocation of a benefit or burden to members of a group from what belongs to the group itself or concerning what it has a right to dispense or demand. Strictly speaking, it is never a matter of distributive justice to take what belongs to another and allocate it to third parties.

The modern problem is that, following the inversion of the understanding of justice, distributive justice has too often come to mean an attempt on the part of government to remedy or to correct an unequal distribution of a resource of some sort, which neither government nor society owns, from one group to another.[14] The simple fact of a disparity may be sufficient to demand action to restore distributive justice, even where no actual injustice can be identified as a cause of the disparity.[15]

The second broad category of justice is what the tradition calls “general justice”. The objects that general justice serves are the principal common goods of the community, not particular, identifiable individuals. Once again, two types can be distinguished[16]. The first type, often called legal justice, has as its subject civil authorities who are responsible for crafting laws and regulations binding on the community. This would include, in the first place, members of legislatures and parliaments, but also executives, regulatory agencies, and others who are empowered to make rules for society. Legal justice obliges these decision makers to enact laws and regulations that genuinely aim to serve the common goods of the society and not to favour some members at the expense of others. This same form of justice obliges those under the jurisdiction of government, as secondary subjects, to obey its just laws and rules.

It is the second type of general justice that prompts some confusion. Without going into too much detail, we might simply say that this type of justice, has as its subject the members of the society, who have a duty, as the occasion arises, to act in support of the common goods even where no specific law or regulation explicitly requires them to do so. The idea here is that no system of laws can foresee all possible sets of circumstances but that, as social creatures, individuals have responsibilities to their communities—or more precisely to the other members of their communities, in general—that require them to attend to the common goods.

It is in the context of general (common) justice that we need to consider the idea of social justice. Social justice has become a name for an objective that should receive the support of all right-thinking members of the community—but it is an objective that has no accepted definition. For the most part, advocates of social justice seem to understand it as a name for greater equality in society or perhaps as a name for a state of affairs in which injustice is entirely eliminated. We can do better than this. We can say that in the Catholic social tradition, and in the analytic framework we have just discussed, social justice is a synonym for the instrumental common good of society. Or, as a virtue of persons, social justice is a synonym for the virtue of solidarity, as defined by St John Paul II in Sollicitudo rei socialis (38): “a firm and persevering determination to commit oneself to the common good”. In any event, within the context of the Catholic social tradition, social justice should be understood as a dimension of general justice, not as a new and distinct form of justice. Furthermore, while the pursuit of justice is essential to the promotion of the common good, it is never enough. Justice must be supplemented by the practice of charity[17], by a genuine love of the other, which not only gives to others what is theirs, but also gives to them what is mine[18].

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Tax policy in Catholic social thought

Our vision of the human person, the nature of human flourishing and views about the functions of government will determine our preferences in taxation. The question before us then is: what general shape might tax policies take if they were influenced by the Catholic social tradition?

The magisterium has had relatively little to say directly about taxation. When theologians have taken up the topic, it has often been to discuss the obligations of citizens to pay taxes, not to explore in detail what just and wise taxation might be[19]. However, building on our discussion of the common good, justice, and the role of government, we can effectively tease out an answer to this question.

First of all, whatever other objectives it might pursue, the collection of taxes should be just and efficient. Adam Smith’s discussion in The Wealth of Nations is a well-known and widely-accepted summary of principles. He proposed that tax levies ought to be clear and certain, proportionate to the ability of the taxpayer to pay, convenient as to timing and mode of payment, and not wasteful in method (so as not to take from taxpayers more than was necessary)[20]. It could be added add that tax levies should treat all taxpayers who are similarly situated in the same way, so as to respect distributive justice.

In broad outline, tax levies are imposed for three sorts of objectives. The first is to raise revenue to obtain resources in support of the ordinary activities of government. The second is to influence otherwise legal behaviours in accordance with legislative goals. The third is for redistribution to transfer wealth from private owners to others in the community in pursuit of greater equality. We will consider each category in turn.

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Taxation and revenue raising

The revenue category is foundational and has been the focus of most of the discussions of the duty to pay taxes. The regulatory objective is less relevant for our consideration here (though subject to much abuse), so comments will be focused on revenue and redistribution.

Government has a duty, probably more often espoused than practised, to be cautious in its demands for funding so as to leave as much of the wealth of the nation in private hands as may be consistent with the common good[21]. The more the government takes in taxes, the less the poor have to meet the needs of their families, the less the better off have to help others and, in some cases, the longer people have to work in order to have a decent standard of living, thus potentially reducing the time they can spend with their families, looking after children and the elderly and so on.

Secondly, it is important for the health of a nation that its citizens participate in public affairs in appropriate ways[22]. One of these appropriate ways is by sharing in the burden of supporting the legitimate functions of government. Citizens who have no practical obligation to do so are excluded from this mode of participation. But they have a diminished sense of ownership in the business of governance and, indeed, little reason to be concerned that government officials moderate spending. This is particularly mischievous in a democracy because, as Aristotle observed, the dangerous temptation in a democracy is for the majority to seek to acquire the wealth of a minority. If the majority, or a near majority, have no obligation to pay taxes at some level, their judgment about public matters may be too easily swayed by leaders who promise benefits for which the bill never comes due[23].

A third point is that any decisions about tax levies require practical wisdom and balance. There is rarely unanimity among legislators about what programmes should have priority in public spending and at what level of support. There is rarely only one right or best answer to the challenges facing a community. Communities are, and should be, free to determine for themselves what accommodations and compromises seem best to make under the circumstances. And in negotiating these compromises, citizens should remember that their neighbours may hold very different views in good faith. Indeed, it is because people hold legitimately differing views that those things that government, as opposed to other bodies in society, take responsibility for should be limited.

Questions about the revenue-raising objective fall generally into four (sometimes overlapping) categories, concerning the distribution of burdens, preferences, exemptions and subsidies.

For private individuals tax burdens are generally distributed at least proportionately and often progressively. There are generally two “tails” to the distribution of tax burdens. One tail, which is broadly endorsed, moderates (or even eliminates) tax obligations for those with modest incomes or limited resources. The other tail imposes a higher-than-average rate on individuals with greater resources. The Church approves the first tail but has said little about the second. The desire to ensure that burdens are borne by those who can afford to contribute often leads to a very high proportion of taxation being paid by the very rich. In the United States in recent years, taxpayers with an income that places them in the top 25 per cent account for nearly 90 per cent of federal individual income tax receipts; those in the lowest 50 per cent of income pay less than 3 per cent.[24] Criticism from politicians to the effect that higher earners do not “pay their fair share” distort this reality.[25] Now, if individuals in the higher income categories peacefully accept this greater burden, perhaps in acknowledgement that a developed society offers them opportunities that others would not, then it is hard to argue that the distribution of burdens is unfair. But we should consider whether such a skewed distribution of burdens is conducive to a society in which all parties have a shared understanding of the common good. In mitigation, it should be noted that those on lower incomes pay a greater proportion of other forms of taxes (such as value added taxes) than they do of income taxes.

In sum, from the perspective of the Catholic social tradition, the lower tail of progressive taxation is soundly endorsed (subject to good judgment in execution) but the array of regressive taxes, especially as they are more than de minimis, may be a challenge to the just distribution of the burden of supporting government.

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Taxation to influence behaviour

When it comes to using the tax system to influence behaviour, various means are employed to encourage preferred behaviours or outcomes. It is common for those who make gifts to approved charitable and non-profit organisations to be able to deduct some or all of the amount of the gift from their taxable income. The object of this is to encourage private support for such organisations. This is both in recognition of the fact that this support is often more efficient than support from government and that it may benefit many organizations that would otherwise be unlikely to receive public support. In addition, those who give their income to such causes in accordance to what they believe to be their duties to others in society do not have that income available to themselves and so it should not be taken into account when determining the tax burden. Taxes may also be designed to encourage support industries favoured by the legislature (for example, green energy) or to penalise other forms of consumption (such as cigarettes).

If one were to assume that the government’s need for resources is a constant (independent of actual revenues), then tax preferences shift some of the burden of supporting government from those who qualify for them to those who do not. No doubt the Church approves of preferences for the donations it receives but not merely for these gifts and not merely out of self-interest. The organic vision of society compels us to prefer a community in which many activities of public benefit are organised and supported by private citizens: not everything should be done by government. We also recognise the importance of the virtue of beneficence, in which individuals recognise their duty to use wealth well and are encouraged to do so.

At the same time, we must acknowledge that the power to offer preferences in service of the common good can also be misused to favour individuals and groups to the diminishment of the common good. Industries and organisations that can afford professional lobbying may be able to secure preferences that support their businesses directly by reducing their costs. This may give them an advantage over competitors which may well be unfair; it may at least shift costs to taxpayers. This one would be likely to be a violation of distributive justice but, once again, the context is important. The deciding principle is that the common good be served.

Tax exemptions or other forms of tax preferences are also often extended to the activities of approved not-for-profit organisations (for example, making higher education fees value added tax exempt or allowing them not to pay income or corporate tax on investment returns). The objective of the exemption is to encourage the formation and operation of private associations whose purpose is to serve the common good in defined areas. Once again, Catholic teaching would approve the spirit of these exemptions, though some have been criticised in recent years. The last several decades have been particularly kind to a handful of major private universities, for example, who have been able to accumulate massive endowments.[26] Voices have been raised questioning whether the shifting of costs occasioned by these exemptions is necessary and wise. In response, many institutions have begun making voluntary payments to local municipal governments to help defray the public costs of their operations. As many Church buildings occupy valuable land in cities (which land is taken off the tax rolls), we may expect to see movements in the future pressing for their tax exempt status to be reconsidered.

The last category here is subsidies, which share some characteristics with preferences and exemptions. Subsidies are intended to provide financial support for individuals and families or groups in consideration of the service to the common good they already provide or as compensation for burdens borne or imposed on them for the sake of the common good.

They may take several forms, such as exemptions from taxation or cash payments administered through the state’s revenue service. A very common example would be benefits offered to parents as support for the contribution they provide to the common good by raising children. In connection with this, we should note that tax policies should take care not to discourage inadvertently (and certainly not deliberately) marriage and family formation. In recent decades, we have seen some tax policies that effectively penalise marriage in some cases or even deny exemptions for dependents if a family is too large. In most cases these have been unintentional but governments have not always been prompt to enact remedies. Taking into account dependents when determining the amount of tax a family pays can also be justified on the grounds of ensuring that the tax system reflects ability to pay and make a contribution for the shared services the state finances through its revenue-raising function. Though this point is contestable, arguably, a household’s taxable income should reflect not just its means but obligations that have to be met out of income, of which bringing up children is one example.

Where governments demand sacrifices for the protection of the common good or, indeed, the preservation of the state, it may also offer compensation to those affected. This reasoning can justify war pensions and the subsidisation of businesses that are required to pause trading during the challenge of a pandemic such as COVID-19.

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Taxation for redistribution

A third objective for tax levies is to address inequality of wealth by taking private wealth through taxation from those who have more, in order to give to those who have less. Evaluating such a policy poses a dilemma for the Catholic tradition. On the one hand, respect for private ownership is deeply embedded in the tradition but so, too, is the duty to aid the poor. However, clarifying what this right and this duty really require will help us to relieve most of the apparent tension and to reduce the issue to one of balance and judgement.

The Catholic tradition has long defended the right of ownership but at the same time it has insisted that this right has limitations.[27] The right to own property does not mean that the owners may do with their property whatever they wish. Pope St John Paul II used the metaphor of a “social mortgage” to describe the claim that the common good has on private ownership.[28] The key idea is that individuals have a right to own property sufficient for them to live out their vocations with dignity but that wealth possessed above a reasonable sufficiency ought to be at the service of the common good. If your neighbour is starving, and you have more food than you can consume, you have a duty to share.

That said, the right to own property is a natural right, not a right created and bestowed by government or society. As a consequence, government cannot suppress this right, though it may regulate it. One form of regulation may be an intervention by government in which private property is taken when this is strictly necessary to secure the common good.

When government acts in this way, there is a common presumption that it has a duty to compensate the owner for loss of the property. Intentional redistribution of wealth, however, poses a somewhat different problem. One cannot take the wealth of private parties and at the same time compensate them for the loss of that wealth. So, the argument has to be made that this coercive taking serves the common good because the continued possession of wealth or property by certain private parties is in itself a threat to the common good. This is a hard argument to make and harder still to defend such a taking as a last resort or sole option.

We might defend such a taking by showing, if it were possible to do so, that when inequality of wealth reaches a certain level in a society, unrest prompted by envy is quite likely to harm the common good severely. It can also be argued that the common good is not promoted when all people do not have sufficient to buy basic necessities. Government may be acting responsibly if it redistributes income and wealth in such situations. It would be better to provide incentives to wealthy individuals to induce them to use their wealth effectively for the common good and to recognise their beneficence publicly.[29] Also, both the Church and governments should nurture charitable and other institutions that help ensure that poverty can be relieved and the living of a fulfilling life is promoted without the direct help of the state.[30] But if there is great need in a society and the wealthy refuse to serve the common good, then a coercive taking may be justified—but rarely.

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Seventy years ago, the French philosopher Jacques Maritain gave a lecture in Chicago in which he reflected on his recent experience as one of the drafters of the United Nations’ Universal Declaration of Human Rights (1948).[31] His attention was captured by the fact that the various individuals who participated in the project came from diverse cultural and intellectual backgrounds.[32] While it soon became evident to them that this diversity prohibited them from arriving at a common foundation for the project, they were nevertheless in substantial agreement about the result. In other words, they found themselves agreeing on the articulation of a list of human rights but could not agree on a common set of theoretical principles on which to base these rights. They wisely decided to unite around the statement of rights and to set aside their disagreements about its foundations.

This was further evidence for Maritain, as if he needed any, that there is indeed an intuitive understanding of natural law embedded in each human heart, an understanding that may often be obscured or distorted by the wrong kind of philosophical reflection. Despite the modern tendency for there to be a clouded vision of the nature and destiny of the human person, there still lingers a deep desire for justice and for a renewed respect for human dignity. What is needed, of course, is a set of constructive solutions that clarify these desires and channel them effectively. The tradition of the Church has something important to offer in this regard, with a clear vision of the human person, of justice and of the common good, and of the genuine role of government in a good society. Even if the foundations of this tradition are not shared, we have reason to be confident that the vision resonates with the human heart. We should proceed with confidence to offer this vision, and its implications for details in areas such as tax policy to a troubled world.

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Paine T. (1776), Common Sense, Philadephia: W&T Bradford.

Pontifical Council for Justice and Peace (2005), Compendium of the Social Doctrine of the Church, London: Burns & Oates.

Smith A. (1776), The Wealth of Nations, London: W. Strahan; and T. Cadell.

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Papal encyclicals and other Church documents referred to in this section

Benedict XVI, 2009, Caritas in veritate, encyclical letter:

John Paul II, 1991, Centesimus annus, encyclical letter:

John Paul II, 1987, Sollicitudo rei socialis, encyclical letter:

Paul VI, 1967, Populorum progressio, encyclical letter:

Vatican II, Gaudium et spes, 1965, Pastoral Constitution on the Church in the World,

John XXIII, 1963, Pacem in terris, encyclical letter:

John XXIII, 1961, Mater et magistra, encyclical letter:

Pius XI, 1931, Quadragesimo Anno:

Pius XI, 1937, Divini redemptoris:

Leo XIII, 1891, Rerum novarum, encyclical letter:

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Questions for discussion

What are the primary functions of government according to Catholic social teaching?

What is the distinction between “distributive justice” and “social justice” in Catholic social teaching and how does “social justice” differ from the commonly-used definition in secular discourse?

What are the objectives for which taxes are imposed?

Why might a Catholic support exemptions from taxation of money donated to charitable organisations?

To what extent should governments use taxation for redistribution?

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[1] Jacques Maritain develops the idea of government as an organ of society in Maritain (1951, p 42).

[2] The principle of subsidiarity, which recognizes the organic character of society, is observed in practice, particularly by government, when the sound functioning of the organs of society are promoted and assistance provided when necessary. The result is a rich network of relationships and cooperation which also forms a buffer of sorts between the individual and the civil authorities, balancing the power of the state and protecting the proper freedom and independence of the individual. Subsidiarity, then, is formally a contrary of totalitarianism. It is not surprising that Pope Pius XI would introduce the term in Quadragesimo anno (79-80), which was written in the context of the rise of Fascism and Communism.

[3] Final goods are goals, the purposes for which the association exists. They provide the basis for coordinating the activities of the members. Instrumental goods are the conditions which must be in place if the association is to pursue its goals effectively.

[4] Pope St John XXIII, Mater et magistra (65). He repeated this definition in Pacem in terris (58), and it was taken up by the Second Vatican Council in Gaudium et spes (74).

[5] See, for example, Pope St John Paul II, Centesimus annus (11): “If Pope Leo XIII calls upon the State to remedy the condition of the poor in accordance with justice, he does so because of his timely awareness that the State has the duty of watching over the common good and of ensuring that every sector of social life, not excluding the economic one, contributes to achieving that good, while respecting the rightful autonomy of each sector. This should not however lead us to think that Pope Leo expected the State to solve every social problem. On the contrary, he frequently insists on necessary limits to the State’s intervention and on its instrumental character, inasmuch as the individual, the family and society are prior to the State, and inasmuch as the State exists in order to protect their rights and not stifle them.” See also, Pope Leo XIII, Rerum novarum (28-29).

[6] Pope St Paul VI, Populorum progressio, (14).

[7] Pope St John Paul II, Centesimus annus (13).

[8] Pope St John Paul II, Centesimus annus (13).

[9] An argument can probably be made to the effect that most, perhaps all, of the following functions could be delegated to non-governmental actors, with government retreating strictly to oversight. For example, hired arbitrators might substitute for the judiciary, mercenaries for the military, taxation contracted out to private corporations, and so on. Perhaps so, but I know of no societies in history that have done anything like this successfully and some that have found outsourcing major functions to be disastrous in the end.

[10] See St Augustine, The City of God, especially Book XIX.

[11] Ulpian († AD 223): “Iustitia est constans et perpetua voluntas ius suum cuique tribuendi.” Digest 1.1.10.

[12] Though various injustices, many of which may be impossible to attribute to specific individuals, may aggravate the harms caused by chance events.

[13] See Pontifical Council for Justice and Peace (1995, 201), hereafter referred to as the “Compendium”.

[14] We have to acknowledge that sometimes, perhaps often, there can be a maldistribution of a resource because of actual injustices. In such cases, it is entirely appropriate for government to intervene to vindicate the rights of the victims but this would be a matter of enforcing the obligations of commutative justice, not distributive justice.

[15] See the Compendium (353), where the document speaks about government intervention to remedy situations in which the ordinary operation of the market is “not able to guarantee an equitable distribution of the goods and services that are essential for the human growth of citizens”. This may be a matter of distributive justice (though not here a remedy for injustice), properly speaking, as a service to the common good, in which government distributes benefits to those in need from what has become common property through lawful taxation. The key point is that it is the urgent need of particular persons that is addressed, not the mere fact of inequality. What is neglected here, though not purposely dismissed, is that private charitable activities also supplement what the market can do and in many ways may be superior to government intervention, which is better regarded as a last resort.

[16] At this point, the classical tradition becomes inconsistent, both in concept and in vocabulary. See Kennedy (2019, pp 106-115) and Calvez, and Perrin (2019, pp 116-150).

[17] Note that Pope Pius XI, who first used the term “social justice” in a papal encyclical, often coupled it with “social charity” so that justice and charity became the two virtues essential to healing the problems of society. See Quadragesimo anno (88, 126) and Divini redemptoris (51-54); see also Pope Benedict’s encyclical, Deus caritas est (28).

[18] See Caritas in veritate (6).

[19] The most prominent example of this discussion is Crowe (1944, 84).

[20] Adam Smith (1776) book V, chapter II, part II.

[21] See Pope Pius XII, “On Public Finance” (Address to delegates at the Congress of the International Institute of Public Finance, 2 October 1948), translation in The Catholic Mind (March 1949), pp 189-190. Also, Pope Pius XII, “On Taxes” (Address to the International Association for Financial and Fiscal Law, 3 October 1956), translation in The Pope Speaks (Summer 1957), pp 77-80.

[22] See Catholic Church (1994, 1913-1915).

[23] We see this, for example, in the rhetoric of office seekers who promise programmes that must be funded with higher taxes, but also promising that only the wealthy will see taxes increase. This contributes to distrust between voters.

[24] Editor’s note: in the UK, there is a similar trend. The top 1 per cent of income tax payers pay 29 per cent of all income tax and the top 5 per cent pay over 50 per cent of all income tax.

[25] It is really under the heading of legal justice that we find a response to the claim that some members of a society do not pay their “fair share” in taxes. However, while people have a duty to obey just laws, including tax laws, they do not ordinarily have an obligation to go beyond the text of the law to comply with what they suppose (but often cannot know) to be the spirit of the law. Those who object to tax avoidance behaviours should focus their dissatisfaction first upon the legislators who either crafted the tax code badly or failed to co-ordinate the codes of one jurisdiction with those of another.

[26] The endowment of Cambridge University in the UK in 2019 was estimated to be about £6.9 billion (roughly $8.4 billion), and that of Oxford University was about £6.1 billion (about $7.4 billion). By comparison, Harvard University’s endowment was estimated to be about $41 billion (£32 billion). The University of Notre Dame, the wealthiest Catholic university in the world, had an endowment of about $12 billion (£9.5 billion), larger than the next five wealthiest American Catholic universities, combined.

[27] For modern examples of papal defences of private ownership see, for example, Rerum novarum (6-11); Quadragesimo anno (44-46); Mater et magistra (19) and Pacem in terris (21); Populorum progressio (22).

[28] Sollicitudo rei socialis (42): “Private property, in fact, is under a ‘social mortgage,’ which means that it has an intrinsically social function, based upon and justified precisely by the principle of the universal destination of goods.” His predecessors expressed corresponding views: Quadragesimo anno (47-49); Mater et magistra (43) and Pacem in terris (22); Populorum progressio (22-23). The same view was expressed by the Second Vatican Council in Gaudium et spes (69-71).

[29] Pope Pius XI was explicit about this when, deep in the Depression, he wrote that the investment of “superfluous” wealth in ways that would create employment and useful goods would be an excellent use of that wealth. See Quadragesimo anno (50-51).

[30] This point has been made strongly in Rerum novarum, Quadragesimo anno and Centesimus annus. It is also important that the state does not undermine such institutions thus reducing their effectiveness and increasing the burden on the state.

[31] Maritain (1951).

[32] For another account of this important event, with a focus on the participation of Eleanor Roosevelt, see Glendon (2001).

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About the author

Robert Kennedy is a full professor in the Department of Catholic Studies at the University of St Thomas (St Paul, Minnesota). He received his PhD in mediaeval studies (with a concentration in philosophy and theology) from the University of Notre Dame, and also holds master’s degrees in biblical criticism and business administration. Robert Kennedy has published widely in the area of Catholic social thought and teaches courses on the Church and Culture and on St. Thomas Aquinas. He is a member of the American Philosophical Association.

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