"Taxes are good," is not a statement that we hear very often. Most of the time we hear just the opposite. If there has ever been one subject so hotly debated and much hated, it would be taxes.
Low-income families in Arkansas are paying a higher percentage of their income in taxes because of regressive taxes like the sales tax, Copley and Bodenhamer write.
The fact of the matter is we all benefit from our tax system. Nobody likes to pay taxes, yet few people want to give up the benefits. We enjoy good roads to drive on. We expect the police and fire services to keep us safe. We insist on clean drinking water. We want our children to have great educational opportunities through public schools. These are all possible by our tax dollars.
Many of us get a glazed-over look in our eyes when we hear the tax jargon and the discussion of numbers. But for those of us who live and work in Arkansas, if we care about issues that affect children and families, then we should be familiar with tax policy. Unfortunately, unbalanced tax policies make it very difficult for working families to find opportunities to better their situation.
What do tax policies have to do with the Christian faith? Why, as Christians, should we care? Why should we try to understand the complexities of tax policy?
Tax policy affects humans. And it often affects the low and middle income working families of Arkansas the most.
We care because our faith tradition calls us to care. We look to Scripture to find a rationale for our actions as Christians. In Genesis, human beings were created in God's image. This affirms the inherent worth and dignity of all people, regardless of their economic status.
Throughout the Old Testament, God has concern for the poor. The Torah has numerous admonitions about treating those who are poor with righteousness and justice. Then, the Prophets, speaking on behalf of God, called the Hebrew people to repentance when they failed to see the poor in their midst.
This was the background in which Jesus grew up and was nurtured in his faith. It is no surprise that Jesus called his followers throughout the gospels to "care for the least of these." He ushered in the reign of God. It was the new era promised in the Old Testament. It was the new era of justice for all that the Messiah would bring. It would be a time when there would be no poor. It would be the time when the voiceless would have voice. It would be the time when harsh policies would no longer exist that affected "the least of these" so harshly.
As those following in the paths of Christ, we are called to seek justice for "the least of these." We are called to care for "the least of these" and what affects the quality of their daily lives. To follow Christ means to have our lives formed and shaped in the image of Christ. To follow Christ means to care for those who are low income. This will affect and shape our decisions in daily life.
For the most part, we do not set out each morning searching for someone to step on to get ahead in the world. However, many Arkansas families are being stepped on by an unbalanced tax system. The Arkansas tax system is regressive.
Low-income families are paying a higher percentage of their income in taxes because of regressive taxes like the sales tax. This puts an extra burden on working families. Arkansas has one of the highest sales tax rates in the country. Sales taxes make up more than a third (38 percent) of all state general tax revenue.
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Overall, low and middle income families in Arkansas (those with incomes less than $40,000) pay 12 cents of every dollar they earn in all state and local taxes, compared to just 6 cents on every dollar paid by the richest 1 percent (those with incomes more than $326,000). Some large corporations also receive more favorable treatment under the tax system, which leaves small businesses at a competitive disadvantage.
Arkansas is far from a tax system that treats all equally and meets our needs. Arkansas' tax system relies too much on the regressive sales tax and not enough on other sources of revenue. Our state relies less and less on taxes paid by corporations, and more on low and middle income working families. As a state, Arkansas is stepping on the backs of working families to pay for services used by everyone.
Why has Arkansas' tax systems become so unbalanced? For one reason, Amendment 19 of the state constitution was passed in 1934 to require that any increase in taxes then in existence must be approved by a super-majority vote by the state legislature (at least 75 percent). However, the sales tax does not fall into the category; it only requires a simple majority vote (at least 50 percent).
Arkansas' tax system does not generate adequate revenue to support services that are critical to the well-being of children and families and the state's future prosperity. Arkansas is ranked next to last in the country in terms of its fiscal capacity to provide the level of public services that its population needs, given its high level of poverty, according to a 2006 study by the Urban Institute, Brookings Institution's Tax Policy Center and the Federal Reserve Bank of Boston.
Arkansas' citizens must fight for a fair and responsible tax system. Those who earn the most should pay a higher percentage of their incomes on taxes than those who are just barely scraping by. A state tax system in which everyone, including the wealthy and corporations, pay their fair share will give Arkansas the resources it needs to help children and families thrive and will pave the way to a better future for all Arkansas residents, not just a select few.
We focus too much time and energy on filling the cracks and looking for ways to cover shortfalls for critical programs. We should be spending that effort working to make programs more efficient and effective. Arkansas needs to modernize its tax and budget system to allow the state economy to grow and allow working families to thrive.
To do that, Arkansas should enact a state earned income tax credit, change tax policy to close corporate income tax loopholes, expand the sales tax base to reflect the economic shift from goods to services, revitalize and strengthen the state personal income tax, ensure that the state is prepared to capture tax revenue from Internet sales, and reverse the expiration of the estate tax on wealthy estates.
Arkansas must invest more in its people and infrastructure in order for all to thrive in the 21st century. Far too many of our neighbors live in poverty, lack the skills to move up in the workforce and are not able to adequately support their families.
Instead of stepping on the backs of working families, we need to find ways to work together and provide stepping stones for families to step up out of poverty. By understanding and becoming involved in the work of tax reform, we can help take the first step.
Rev. Stephen Copley is a United Methodist pastor and chair of the Arkansas Interfaith Alliance; Rev. Pat Bodenhamer is a United Methodist pastor and on staff of the Arkansas Advocates for Children and Families.