Taxes are usually a pretty controversial issue, which few people seem to give much thought to beyond "higher" or "lower." What are the purpose of taxes? And how should they be levied. Originally, taxes were created to fund the government. In modern times, they have become one of the main tools for the government to encourage or discourage behavior. IRAs encourage retirement saving, alcohol taxes discourage drinking, etc. Recently the Supreme Court upheld the fundamental parts of Obamacare, because it was only enforced through taxation. That explicitly endorsed this method of implementing change, and got around the existing constitutional limitations on government power. But how should we be taxed?
Mathematically, there will be an optimal tax rate that generates the most revenue for the government, but not one can accurately determine what that is, due to the complexity of the equation, and the numerous variables involved. The conservative claim that lowering taxes stimulates the economy enough to increase total revenues is not always true, nor is the liberal claim that raising taxes is a good idea. A 0% tax rate raises zero revenue, as does a 100% tax rate. (Removing all incentive for a currency economy.) If we were to graph that, it would give us a Y-value of 0 for input values of 0 and 100, and various positive results in between, forming a curve. The peak of that curve would be the tax rate that returns the highest total revenue to the government, but the precise shape of that curve is impossible to know with certainty. Conservatives usually believe that we are past it, while liberals believe we have not yet reached it.
That leads to the next question, which is should the government be trying to receive the maximum possible revenue. On principle I would say no, only enough to cover the necessary expenses. But given the $16Trillion debt, I think that at this point that is a reasonable point to aim for. I don't claim to know what the ideal rate is, I just want to hear a decent debate about it, which would never include the phrases "(raising/lowering) taxes ALWAYS (increases/decreases) tax revenue," which is never a true statement.
Personally, I'd like to pay less in taxes, but I am not opposed to paying "my fair share," whatever that in reality actually is. But I oppose expanding government, which would lead me to advocate lower rates if it weren't for the fact that the US government never hesitates to borrow money to cover whatever expansion the existing tax revenues don't cover.
But there is one area in particular where I have been examining the effect of the level of authority taxation gives the government. Churches have traditionally been tax exempt in America, to prevent the government from using excessive taxes as a way of influencing of controlling churches. But as taxes have become more extensive and valuable, that has had some interesting side effects. Typically, church donations are tax deductions for the donor, income tax free for the church, which also doesn't pay property taxes, sales taxes, or employment taxes to ministers, who are exempt from income tax as well. There is nothing necessarily inherently wrong with this, but it leads to an interesting paradox.
The value of these exempted taxes is quite high, and if the government was to change the rules, that would alter the budgets of churches drastically. The threat to revoke certain church's tax exempt status is now being used by the government to exert authority over them. I consider this to be a huge threat to the independence of the church, and the separation between church and state. All anyone needs to do is look to Europe to see the result of that line being blurred. The Queen of England appoints the leaders of the Church of England, without regard for God or any other spiritual factors. So how can we remove this threat to the independence of churches?
Ironically the answers seem to be to make what is threatened actually happen. The original threat appeals to the greed of the church leadership, who don't want to see their church growth limited by tax expenses. But if churches were already paying the same taxes as everyone else, this wouldn't be a potential threat. I am not advocating getting rid of tax deductions for donations, just the tax exemptions that churches have. They could pay property taxes, and sales tax, and employment tax just like everyone else. There shouldn't necessarily be an income tax for it as a non-profit institution, but it wouldn't be unreasonable for ministers could pay income taxes. They receive the same citizenship benefits as everyone else does.
I was very opposed to this idea when I first heard it suggested, since it doesn't initially appear to promote church independence from government intervention. But after pondering it for a while, I began to see the wisdom in it. And Mark 12:17 could be used to support it from a Biblical perspective. Now what if the government tries to abuse this power we give them to collect taxes from churches, to influence or control the church? Well then we fight it as a violation of the separation of church and state, just like we would fight anything else. But our case would be much clearer in that situation, and it is not like they aren't already trying to abuse the current exempt status to influence churches and their leaders, so we would be no worse off in that regard. But any abuse of churches would be much more obvious if churches were on the same playing field as all other non-profit entities.
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