Faith & Economics
NUMBER 77, Spring 2021
Four Myths Concerning Taxation and Government Spending
Daniel K. Finn
St. John’s University
Four “myths” handicap thinking about taxation among Christians. The first myth asserts that relying on the government to take care of the poor undermines the personal obligation that all Christians have to love their neighbor. Personal virtue is essential, but law is one important way a community insists on its moral standards, and law does shape moral character over time. The second myth is that US taxes are high. They are not. If total US taxes (national, state, and local) were increased to the average for OECD nations, each year we would have another $1.6 trillion (with a “t”) to do the many important things that government currently “can’t afford” to do. The third myth is that because the problems of the poor are rooted in the “culture of poverty,” government efforts “just make things worse.” But as University of Chicago economist James Heckman has demonstrated, quality preschool programs for 3- and 4-year-old children from poor families have lifelong effects that reduce time on welfare and in the criminal justice system and improve employment and the length of marriages. The fourth myth assumes that value-free economics alone can justify economic policy recommendations. Comparing the deadweight losses of different forms of taxation is inadequate for endorsing one tax over another. Just like the minimum wage law, each has both positive and negative effects and thus it takes a moral judgment to endorse any policy responsibly.