Jerry Bowyer asks, What Would Jesus Tax?:
“When Jesus tells us he will regard the way we treat the hungry, the homeless, the stranger, the sick, and the prisoner as if we were treating him that way, it likely means he wouldn’t think capital gains tax cuts for the wealthy and food stamp cuts for the poor represent the best domestic policy.”
— Jim Wallis, Sojourners MagazineWhen I read Jim Wallis’s attempt to use the gospels to set the capital gains tax rate, I flashed back to a speech that I heard Ted Kennedy give in the 1980s. Attempting to stifle the rising tide of conservative evangelical political engagement, Senator Kennedy said ‘I suggest that the almighty has not taken a position on the IRA deduction.’ Great line, I thought.
How times have changed. Keeping the Bible out of public policy was the left’s line in the 1980s. Now they’ve switched to trying to get a 25% marginal tax rate on long-term capital gains out of St. Luke.
It’s not so far fetched as might seem at first. Jesus, in fact, did speak about capital gains. He told a story about three stewards. One achieved high capital gains on the owner’s investments. The other also did well. The third one, failed to achieve any capital appreciation at all and was fired.
Jesus also told a story about capital losses. A steward, about to be fired, bargains to sell notes receivable back to the lenders at reduced price. In other words he imposes capital losses on his about-to-be-former employer. It’s a pretty confusing story.
Unfortunately neither the parable of the capital gains nor the parable of the capital losses makes any mention of taxes. Or maybe it’s not so unfortunate after all. Maybe the lack of detail spares us from the temptation to try to exegete tax rates out of the holy scriptures.
As a Christian, he says, “God offers us no waiver from the hard work of immersing ourselves in the data of economics and finance”:
Here’s what the data show: cuts in capital gains tax rates tend to coincide with decreases in the poverty rate for the time periods for which data are available. For instance, Ronald Reagan cut the capital gains tax rate as part of his tax reform act of 1986.
Bill Clinton cut the capital gains tax rates on long-term gains in 1997 and a strong decrease in poverty rates resulted. George Bush cut the capital gains and dividends taxes in 2003 and the resulting economic surge caused a decrease in the 2004/2005 poverty rate. Although comparable data are not available for the first of the supply-side tax cuts which were proposed by John Kennedy, his rationale for those cuts was the alleviation of poverty, claiming that in economic affairs “a rising tide lifts all boats.”