Michael Swan

Pay up: taxes and the common good

  • March 10, 2023

If paying your taxes seems complicated, the morality of finishing the job isn’t, according to Catholic authorities from St. Thomas Aquinas through to Pope Francis.

“Submission to authority and co-responsibility for the common good make it morally obligatory to pay taxes,” reads the Catechism of the Catholic Church (2240).

That clear, plain judgment is based on St. Thomas Aquinas’ extensive writing about the common good. For Aquinas, the common good is the pre-eminent goal of society and individuals have a moral duty to contribute to that goal. 

“The good of the whole takes precedence over the good of the individual,” the Angelic Doctor wrote in his Summa Theologica

And St. Thomas believed that good had to be enforced.

“It is no robbery if princes exact from their subjects that which is due to them for the safe-guarding of the common good, even if they use violence in doing so,” said St. Thomas.

That Catholic moral judgment about taxes isn’t universally shared by Canadians. Over $400 billion in Canadian so-called “investments” can be found in the top 16 tax haven jurisdictions around the world, according to Canadians for Tax Fairness, a labour and academic supported non-profit. C4TF pegs the annual tax gap — the difference between how much tax is owed on all corporate and personal income and the amount actually collected — at $30 billion. 

The more conservative Conference Board of Canada estimates the tax gap in 2019-2020 was $16.9 billion, or 6.4 per cent of all taxes owed. In either case, the missing billions have to be covered by honest taxpayers.

Some of the debate over how much wealth is hidden from the taxman circles around the difference between tax evasion (a criminal offence) and tax avoidance (a major industry employing lawyers and accountants). 

On tax evasion, Pope Benedict XVI was unequivocal in his 2010 message for the World Day of Peace.

“The fight against tax evasion, which represents a serious injustice and a grave sin, is likewise a part of this struggle (promoting justice and combatting structures of sin),” he wrote.

Pope Francis has maintained his predecessor’s teaching.

“Tax evasion and avoidance, especially on the part of companies, contribute to the persistence of poverty and economic inequality. This is morally unacceptable,” Pope Francis told a meeting of the Italian Anti-Mafia Parliamentary Commission in 2014.

Even without morality, a cold-hearted, clear-eyed economic view would argue that unpaid taxes and hidden billions aren’t doing any good for the economy, King’s University College economics lecturer Jafar El Armali told The Catholic Register in an email. If taxes are supposed to pay for public goods, the tax revenue hiding in offshore accounts gives us a less than ideal supply of public goods.

“If tax evasion deters the government’s ability to produce the optimal amount of these public goods, then the outcome may be considered inefficient from an economic perspective,” he said. 

A couple of key concepts in Catholic thinking about taxes — subsidiarity and the difference between a right to private property and the duty to use private property for just ends — frame the question about morality and taxes.

“Not paying taxes or seeking to avoid taxes is a sin,” said Atlantic School of Theology professor David Deane. 

Avoiding this sin is a matter of understanding subsidiarity, said Deane. Under the Catholic doctrine of subsidiarity we may not abandon the state — which has responsibility for schools, roads, hospitals and more — and claim we fulfill the demands of justice with local charity. Nor can we turn our back on our immediate neighbours and push all our responsibilities onto the state. Subsidiarity is a both-and proposition, he said.

Any failure to include one’s self in the commonwealth, the impulse to stand apart from society, mistakes Christian anthropology, which understands true human nature as basically social, in relationship with God through our communion with others.

“Because too many Catholics have their imaginations colonized by the right and left, some Catholics wrongly assume they can be (British Prime Minister Margaret) Thatcher or (U.S. President Ronald) Reagan, and work only with the poor close at hand and fail to participate in the responsibilities that states rightfully have,” said Deane. “So they resist taxation, and when rich enough they avoid it through accountants. This is a moral failure.”

As the Great Depression spread across the world in 1931, Pope Pius XI applied himself to the moral failures of the economy in his encyclical Quadragesimo Anno.

“The distribution of created goods, which, as every discerning person knows, is labouring today under the gravest evils due to the huge disparity between the few exceedingly rich and the unnumbered propertyless, must be effectively called back to and brought into conformity with the norms of the common good, that is, social justice,” Pius wrote.

For Pius the common good and social justice are responsibilities laid on the state. 

As we write our cheques to Canada Revenue Agency, a long line of popes would have us smile with a sense of satisfaction because we are connected to one another, responsible for one another.

“Economic activity cannot solve all social problems through the simple application of commercial logic,” Pope Benedict wrote in Caritas in Veritate. “This needs to be directed towards the pursuit of the common good, for which the political community in particular must also take responsibility” (italics in the original).

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