Taxes

Taxes.—Citizens owe the government particularly the tribute of taxation, and in war that of military service. Taxes are contributions exacted by the public authority from subjects for the purpose of defraying public expenses or promoting the public welfare.

(a) Thus, they are contributions, and hence a tax is not to be confused with a payment (e.g., fares for passage on government railroads), or with a fine (e.g., pecuniary penalty for evasion of customs).

(b) They are exacted from subjects (i.e., from citizens), who are subject on account of their persons as being members of the State, and from aliens, who are subject on account of their goods, as receiving privileges of residence, commerce, passage, etc.

Kinds of Taxes.—There are many kinds of taxes, but they can all be reduced to two general categories.

(a) Direct taxes are those collected from the person on whom the burden is ultimately to fall. Examples are poll or personal taxes and property taxes (such as those on general property, incomes or inheritances), for these charges remain an expense of the taxpayer himself.

(b) Indirect taxes are those collected from a person other than the one on whom the burden is ultimately to fall. Examples are duties imposed on outsiders (such as customs or tariffs, duties raised for revenues, protection, etc.), external revenue taxes imposed on certain acts (such as the manufacture or sale of commodities) or occupations (e.g., licenses for trades, sports, etc.). In these the charge falls immediately on the taxpayer, but ultimately on a consumer.

Just Taxes.—Tax laws, like other laws, must be just; that is, they must be made by lawful authority and must promote the common good (see 285). The common good requires that taxes be not imposed except for just reasons, and that there be a fair distribution of the burden.

(a) Just reasons are those of public utility or necessity. A tax would be unjust, if it were levied for unjust or unnecessary purposes.

(b) Fair distribution requires that citizens be assessed according to their ability to pay (sacrifices for the public good, special benefits from the use of a tax fund, etc.).

Obligation to Pay Taxes.—The obligation in conscience of just tax laws is admitted by all Catholic authorities.

(a) The teaching of Scripture is quite clear, since Our Lord, in answer to the question whether it were lawful to pay tribute to Caesar, replied: “Render to Caesar the things that are Caesar’s” (Matt., xxii. 17-21); and St. Paul teaches: “Be subject of necessity, not only for wrath, but also for conscience’ sake. Render therefore to all men their due, tribute to whom tribute is due, custom to whom custom” (Rom., xiii. 5, 6).

(b) Reason too shows the need of obligation in conscience, for, unless these laws oblige thus, the common good will suffer through lack of money needed for public purposes, and some individuals will be unjustly burdened and others unjustly favored.

Quality of the Obligation.—There are various opinions about the quality of the obligation in conscience of taxation laws.

(a) Thus, according to one opinion they oblige in conscience and under sin, that is, as preceptive laws (see 561 sqq.). For the natural law and justice require that the members of society contribute the necessaries to the social body organized for their benefit, or that the people live up to their implicit contract with their government by giving compensation for the services they receive.

(b) According to another opinion tax laws oblige in conscience only under penalty, that is, as penal laws. The arguments for this view are, first, the sufficiency of the penal obligation (i.e., the heavy fines imposed) for the attainment of the laws’ purpose, and, secondly, the common opinion of citizens that they commit no sin by merely evading payment of taxes. Furthermore, it is added that, if these laws were preceptive, conscientious citizens would be under a great disadvantage, for they would be placed in the dilemma of either acting against their conscience and committing sin or of paying more than their due on account of the neglect of tax dues by citizens who are not conscientious.

(c) According to a third opinion distinction has to be made between different cases. Thus, some held that laws on direct taxes are preceptive and laws on indirect taxes merely penal, while others say that the kind of obligation depends on the will of the lawgiver, and that tax laws that are preceptive in one country may be only penal in another. If tax laws are merely penal, there is no obligation of restitution, but there is an obligation of payment and of penalty after sentence.

Obedience to Tax Laws.—Obedience to just laws is owed either from legal justice alone, or also from commutative justice with the burden of restitution. There are various opinions about the case of tax laws.

(a) According to the traditional opinion, the obligation is one of commutative justice, because there is an implicit contract between the government and the people, in virtue of which the former is bound to provide for the safety of the people at home and abroad and to secure those things that are necessary for the common welfare (such as roads, postal service, etc.), while the latter are bound in return to pay the expenses of the government.

(b) According to a recent opinion, the obligation is one of legal justice only, because the imposition of taxes is an exercise of authority by the government, and taxes themselves have the character of a tribute from the part to the whole rather than of a wage or payment. Hence, though he who evades taxes is not held to restitution, he sins against justice, and sins gravely if the matter is considerable.

(c) According to other opinions, tax laws oblige sometimes from legal, sometimes from commutative justice. Thus, some admit that in feudal times there was a contract between the governed and the ruler, and therefore an obligation of commutative justice to give services and taxes; but in modern times they say there is no such contract, and the duties of ruler and subjects rest on natural law and legal justice, not on any compact. Others again distinguish between the obligation before the quota has been determined, which is the duty of legal justice to declare properly the value of one’s property, and the obligation after assessment, which is a duty of commutative justice to pay just tax bills.