Wednesday, April 23, 2014

Statism v. Catholic Social Teaching, I: The Role of Taxation


One of our vast crowd of readers commented in response to yesterday’s posting that mentioned Daniel Webster’s dictum from the Massachusetts Constitutional Convention of 1820 (“Power naturally and necessarily follows property”), “Maybe that's why the State taxes us for owning property, and in extreme cases exercises eminent domain — just so we always remember who’s ‘boss’.”

"Ring around a Roosevelt, pockets full of dough" (1938)
“Maybe”? (We were tempted to say, “Yuh think?”)  This has been evident since the New Deal, and why Dr. Harold G. Moulton, president of the Brookings Institution from 1928 to 1952, wrote his 1943 pamphlet The New Philosophy of Public Debt.  Moulton noted that even if the State can raise all the money it needs by floating new debt without limit (a theory Moulton warned leads straight to totalitarianism, p. 88), taxation is still “useful” as a means of achieving social goals.  As Moulton noted,

Harold G. Moulton
“The implications of the new philosophy of public debt from the point of view of taxation are engaging.  If the growth of the public debt is of no moment, one might at first thought be inclined to ask — Why go to all the trouble and expense of collecting taxes?  Why burden the public with ever-increasing levies?  Indeed, if the purpose of fiscal policy is not to balance the budget but to obtain the largest possible ‘net income-creating’ expenditures — as measured by the size of the cash deficit — why not promote the desired end by cancelling all taxes?

“That a reorientation of thought with respect to tax policy would be necessary is suggested in a statement already quoted: ‘Once freed from the obsolete concept of the balanced budget, the larger uses of federal taxes can be creatively explored.’ (“The Domestic Economy,” Fortune, December 1942, p. 16.)” (Harold G. Moulton, The New Philosophy of Public Debt.  Washington, DC: The Brookings Institution, 1943, 72.)

Henry C. Adams
In other words, even if the government could raise all the money it needs just by going deeper and deeper into debt (a danger against which Henry C. Adams warned in Public Debts: An Essay in the Science of Finance, 1898), it would still be necessary to tax for “social purposes.”

Taxation for “social purposes” (Moulton gave control of inflation and job creation as the principle goals of taxation under this new philosophy) is a cornerstone of socialist monetary and fiscal policy — policy that is specifically designed to destroy private ownership of capital.  It is also, paradoxically, a cornerstone of what many people accept as Catholic social teaching.

Pope Leo XIII
The Catholic Church, however, has condemned socialism!  In his first encyclical, Inscrutabili Dei Consilio (1878), Leo XIII condemned the evils afflicting society.  In his second encyclical, Quod Apostolici Muneris (1878), the pope specified the groups who were behind the worst of the evils: the socialists.  As he explained,

“At the very beginning of Our pontificate, as the nature of Our apostolic office demanded, we hastened to point out in an encyclical letter addressed to you, venerable brethren, the deadly plague that is creeping into the very fibers of human society and leading it on to the verge of destruction; at the same time We pointed out also the most effectual remedies by which society might be restored and might escape from the very serious dangers which threaten it. But the evils which We then deplored have so rapidly increased that We are again compelled to address you, as though we heard the voice of the prophet ringing in Our ears: ‘Cry, cease not, lift up thy voice like a trumpet.’(Isa. 58:1) You understand, venerable brethren, that We speak of that sect of men who, under various and almost barbarous names, are called socialists, communists, or nihilists, and who, spread over all the world, and bound together by the closest ties in a wicked confederacy, no longer seek the shelter of secret meetings, but, openly and boldly marching forth in the light of day, strive to bring to a head what they have long been planning — the overthrow of all civil society whatsoever.” (Quod Apostolici Muneris, § 1.)

This seems pretty clear.  As we will see in the next posting, however, it did not go down well with some people.  The controversies started almost immediately — as did the effort to convince people that the Catholic Church meant exactly the opposite of everything that the popes were teaching.

#30#

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