Tax Justice Distilled

General Assembly Takes on Taxation in a Gilded Age

Author Walt Owensby
Author Walt Owensby

“Tax Justice: A Christian Response to a New Gilded Age” provides Presbyterians with a framework for engaging in discussions about the large and growing concentration of income and wealth in U.S. society and about the tax structure as a way of addressing economic inequities. This essay is my restatement of that important report.

To fully engage this important statement on tax justice, the reader must foster a conscious dialogue between its political and economic policy recommendations and the biblical, theological, and social visioning in the background paper. It is with this Christian world-view that one best begins thinking about the document.

Covenant theology is the core theological framework employed (pp. 10-12). Covenant is an alternative vision “of how humans work together.” Contracts set time limits; biblical covenants involve “promises to be faithful for the long haul.” The document proclaims, “(W)e are called by Christ to be a new covenant community;” a call that is regularly renewed at the communion table where “we are knit together to become a manifestation of the Spirit for the common good” (I Cor. 12:7).


The paper makes the case that our current situation constitutes a ‘broken covenant’ – where extremely wealthy individuals benefit greatly from American society and do not proportionately contribute to its continuing welfare.

Because scripture portrays partners of human covenants to be equal before God, the migration from the religious sphere to the realities of politics and economics is natural. Equality before God provides a basis for equality before the law – the quintessential responsibility of government. Thus the covenantal perspective seen in the American constitution illumines the social dimensions of nationhood – the rights, obligations, and duties of life together.

10 commandmentsEquality before God also “makes us question the moral acceptability of extreme inequalities of wealth and power.” The paper makes the case that our current situation constitutes a ‘broken covenant’ – where extremely wealthy individuals benefit greatly from American society and do not proportionately contribute to its continuing welfare. What has been lost is the sense that “we are all in this together.”

A just and well-ordered life together is the social vision of Christian faith and the essence of reformed covenantal theology. “An equitable and adequate tax system,” it reads, “is needed in order to promote such a society.” From that premise, the paper turns to the mechanics of what is wrong with our present structures and how to go about repairing them.

What’s in a Name?

While the paper will probably be known by its first words as a report on “Tax Justice,” the second phrase about “a New Gilded Age” is crucial. We are reminded at the outset that over the past 30 years or so, economic inequality in American society has risen to extraordinary levels. The study notes that in 2009, the richest 1% of the population owned as much wealth as the bottom 95% of the population. A more recent study (“Global Wealth Databook,”Credit Suisse, 2013) shows that 36.6% of U.S. wealth is in the hands of the exalted 1% – which exactly matches the wealth concentration of the first Gilded Age a century ago. (“Tax Justice,” p.1)

Credit Suisse StudyTo its credit, the General Assembly paper avoids burying the reader in data. I hope you will indulge me a few more numbers that underscore the point that the extraordinary economic inequality we face is not just about 1% of the population; it is a distortion that runs throughout our national life. Let’s stay with the Credit Suisse study for a moment. It shows that the top 10% of the U.S. population owns three-quarters (75.4%) of all economic value. The bottom nine-tenths of people have just a quarter of the wealth, and the bottom twenty percent of the population are worth ‘nothing at all’ in economic terms – they have no net wealth.

Of course, wealth is what the individual or family builds up over time from saved income. The problem is that a vast and growing inequality of income is creating a widening chasm between Americans. Here are a few figures beyond the GA document to keep in mind.


The study notes that in 2009, the richest 1% of the population owned as much wealth as the bottom 95% of the population.

Between 1968 and 2012, the top 5% of the population increased their share of the national income by a total of one-third. Every other income group received a smaller share than 44 years earlier. And every reporting year in between widened the gap. (Data from “Income, Poverty, and Health Insurance Coverage – 1968-2012,” U.S. Census Bureau, 2013).

Income LadderThose eager to defend the present income distribution sometimes say, “Yes, but those are shifting categories; they aren’t the same people from decade to decade. A lot of people move up as they age, grow more skilled and receive higher wages.” That’s salve to the conscience, perhaps, but it reflects more ideological hope than actual fact. A 2013 study by Pew Charitable Trust reports that “Most Americans born at the bottom of the income ladder never reach the middle rung.” Indeed, 70% of Americans born poor never get to the middle.

That is the darkening shadow of our new gilded age! And that is the reality the GA report seeks to address and change.

Principles of the Covenant Framework

The GA study begins by stating its conclusion: “It is a basic mark of a healthy social covenant that all share in the society’s benefits and burdens. Just taxation is a foundational part of a moral society’s answer to poverty and its close relatives, inequality, economic insecurity, and social immobility…Each citizen has an affirmative duty to contribute to the common good by paying their fair share of taxes” (p.1). The remainder of the document marshals data to explain and support that conclusion.

Building on previous General Assembly policy, the study lays out five principles by which to establish and judge a just tax system.

1.) Progressivity is the measure of fairness. Those who have greater incomes should not only pay more in taxes but should also pay a higher percentage of their income as the way to begin redressing the present redistribution upward that feeds the growing gap in wealth.

tax-justice-logo-e13480879602862.) Transparency identifies the burdens and benefits of society and makes clear how each citizen is sharing proportionately in them. The present complexity of the tax code is regarded as an indication of the lack of transparency exploited by many to avoid paying a fair share of the costs of our national life.

3.) Solidarity underscores the principle that society depends upon mutual support for the benefit of all. We do not just pay for what we individually need or get but for what we need and have together.

4.) Sustainability grows out of the biblical stewardship ethic which sees all of creation as God’s gift to be used and safeguarded as a trust. Resources are to be managed for the common good and the protection of the environment. That means a tax system that provides “green incentives,” reduces waste, and encourages investment and charitable giving to maximize community benefit and protect future generations from health and climate risks.

5.) Adequacy combines efficiency in collecting revenue with sufficiency of social purpose. That involves a tax system that produces enough funds to support flourishing human and natural life and that ensures full and fair collection.

In the thinking of the GA document, these principles embody a taxation system that is part of the self-government of communities. Through them, we together envision and fairly pay for our shared life. And the ‘we’ specifically includes corporations, individuals, and families of great wealth participating without exercising inordinate political influence to lower their taxes.

From Principles to Public Policies

Getting from a biblical-theological and moral framework to implementing a social vision through specific policy recommendations is almost always the hardest part of a General Assembly action. The document gets very specific in several areas of tax policy.

TaxTheRichFirst, there is the matter of individual taxation. The paper holds tightly to the two basic concepts of progressivity and fairness. Flat taxes (e.g., a sales tax) where everyone pays the same percentage are dismissed as inherently regressive. Similarly, a recommendation calls for an end to the $117,000 cap on the payroll tax because it allows high-income earners to limit what they pay to support the nation’s social security program while others have no choice. Consistent with that concern is the recommendation that there should be an end to applying lower tax rates to investment earnings than to income from wages and salaries.

Less commonly understood is the matter of tax expenditures. Think of a tax expenditure as income the government does not collect because of special exemptions for certain activities of individuals and corporations. This is controversial territory for a General Assembly because it involves questioning deductions long enshrined in the tax code – many that are widely popular because they reduce the tax bill and effectively increase the income of certain classes of persons and businesses.


In most discussions of tax policy, it isn’t long before one hears the anguished cry that “Americans are being taxed to death” by an over-reaching government. Anticipating that complaint, the GA document notes that we are not highly taxed in comparison to our peer countries.

Consider a few of the key issues raised:

  • There is no call to end the mortgage interest deduction, but it should be tied to average home costs so as not to encourage a level of borrowing that effectively subsidizes luxury living.
  • Charitable contributions are recognized as playing “a critical role in our country,” but because tax deductions for them are available only to about a quarter of taxpayers, they are “non-progressive.”
  • Exclusions of capital gains income on home sales, on some foreign-earned income and housing benefits, and on tax deductions for income from state and municipal bonds all favor high income Americans. Similarly, capping property taxes for seniors results in a tax privilege that burdens younger persons.

The paper’s general recommendation for these concerns calls for policies that subject tax expenditures and deductions “to time limitations and periodic, independent review for…social economic benefit.” Without being more specific, the intent is to limit the benefits that go disproportionately to high-income individuals and families.

Corporate Taxation and the Unavoidable Global Context

The GA document has a parallel set of concerns about the taxation of corporations that are many, varied, and measured by the same principles of fairness and progressiveness as are applied to individuals.

money1In an early comment, the paper recognizes the common argument that while “the corporate income tax inherently discourages investment…it should be retained…and increased” (p.4). That, however, must be understood in light of the recommendation that society work to lower the nominal corporate tax rate while increasing actual tax revenues by closing business tax deduction loopholes.

Key among those would be the progressive reduction of the levels of corporate salaries and benefits packages that could be deducted from corporate taxes. While the paper does not suggest setting limits on executive compensation, it does imply that there must be lower limits to what will be allowed as an acceptable business deduction from taxes.

It is also envisioned that government revenues can be increased and the economic system made more stable by implementing a tax on financial transactions of the sort already in use by some countries.


We are reminded that “Tax Justice” is not limited to concerns about income. The document also gives brief but important attention to taxing wealth – which is even more unequally shared in the U.S. than income.

Further, the study notes that to make such policies work, there will have to be greater expenditures on government’s enforcement capacity through federal bureaus and oversight bodies; that need for increased funding must be met.

corporate-tax-evasionWe are reminded that “Tax Justice” is not limited to concerns about income. The document also gives brief but important attention to taxing wealth – which is even more unequally shared in the U.S. than income. The primary vehicle chosen for helping to close this “wealth gap” is the estate or inheritance tax. Establishing a more progressive tax on inherited assets might not dramatically increase government revenues, but it would serve as a constant reminder that fairness cannot allow intergenerational transfers of wealth to create an entrenched ‘rentier’ class that shares less and less of ordinary life with the huge majority of citizens.

This restatement does not address the effects of tax competition and sometimes corruption within what some call “the race to the bottom,” but most of us recognize the pressure on all nations and states to provide tax breaks to attract business and for many companies and individuals to park money in “tax havens.” The report’s recommendations reflect the expertise of an international tax lawyer, but the principle is carried through that a company’s profit brings a covenant responsibility to pay taxes within each jurisdiction proportionate to its economic activity. Poorer countries are often more dependent on taxes from the companies that perform resource extraction, so better international laws would greatly help the problem of poverty and underdevelopment.

A Proper Conclusion

In most discussions of tax policy, it isn’t long before one hears the anguished cry that “Americans are being taxed to death” by an over-reaching government. Anticipating that complaint, the GA document notes that we are not highly taxed in comparison to our peer countries. Member nations of the Organization for Economic Cooperation and Development typically generate 26.1% of gross domestic product in taxes. That figure in the United States is 17.9%. (“Tax Justice,” p.6). Supporting the same point, the GA study includes an appendix listing 34 OECD countries in order of taxes paid as a percentage of national income. The U.S. is third from the last – followed only by Chile and Mexico.

scales of justiceThe burden of this document’s appeal to the General Assembly, however, is not where we stand in relation to other countries. It is that insufficient funds are being provided to our government to finance the vision we have of ourselves as a nation. To quote the background paper, “Greater justice in taxation will not solve all our economic ills, but effective and fair tax laws are vital for producing enough revenue for social and economic advance” (p.7). Thus it is that the nation’s tax system is not only an economic, social, or political problem; it is a moral issue that cannot be set aside. As the GA document so bluntly puts it, “We as a society are tolerating immoral tax laws.” (p.1).


AUTHOR BIO: Walter Owensby retired from the Washington Office of the PC(USA) after sixteen years as a denominational advocate on international and economic issues. An ordained minister of the Presbyterian Church (USA), Owensby holds a Master of Divinity degree from Princeton Theological Seminary and a Ph.D. from the University of Wisconsin with studies in international development. He has written frequently on issues of economic justice for denominational publications and General Assembly taskforces. He is also the author of Economic for Prophets: A Primer on Concepts, Realities and Values in Our Economic System, (Eerdmans), 1989. 

 Read the full text of “Tax Justice: A Christian Response to a New Gilded Age”, the report summarized in this article.

Read more articles from The Road to Detroit: Issues of Social Justice Before the 221st General Assembly!

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