Implementing the ELCA Social Statement on Sufficient, Sustainable Livelihood for All
 Many taxpayers have grudgingly acquiesced to paying federal, state and local taxes because of Jesus' counsel to "render therefore to Caesar the things that are Caesar's." In a representative democracy like the United States, however, this direction becomes much more complex because the taxpayer bears some responsibility for the form and degree of taxation and hence, at least indirectly, is Caesar. Accordingly, it is not enough for people of faith to simply pay their taxes. Being Caesar, we must also work to create a tax system that is consistent with a Christian view of fairness and equity.
 Notions of fairness and equity are generally subjective but especially so in taxation. One person's "job creation stimulation package" is another person's "corporate welfare proposal." The Evangelical Lutheran Church, however, has provided some guidance in the form of a social statement on "Sufficient, Sustainable Livelihood for All," which was adopted by the sixth Churchwide Assembly in Denver, Colorado in August 1999. This article explores some of the tax-related positions adopted by the ELCA as part of that social statement and discusses tools and methods that people of faith can use in evaluating the consistency of a particular tax proposal with the social statement.
The Common Good
 The social statement observes that "[w]hile a market economy assumes people will act to maximize their own interests, we acknowledge that what is in our interest must be placed in the context of what is good for the neighbor." This requires that we look beyond what is best for us in order to determine what is best for the common good. The complexity and interdependency of the federal and state tax schemes makes this evaluation exceedingly difficult. Maine's recent unsuccessful attempt to reform its tax system provides a good illustration of this challenge. Throughout the many months the reform package was being discussed and crafted, it was being sold to legislators and constituents on the basis of how many "winners and losers" each permutation of the package created, relative to the existing system. These "winners and losers" were calculated based on income level, filing status and anticipated consumption patterns. Consequently, a taxpayer could easily determine whether he or she would pay more or less in Maine state taxes under the plan but was completely unable to determine whether the overall package was in the common good.
 Could we assume, however, that the common good would be achieved merely by a determination that the tax reform package created more "winners" than "losers"? Not necessarily, because the additional tax burden assumed by the "losers" (both in absolute dollars and as a percentage) must also be compared to the tax relief experienced by the "winners." Moreover, where that relief or burden falls must be subjectively evaluated for fairness. As a simple example, assume that a tax reform plan produces 99 winners and 1 loser. Further assume that the loser is at the lowest income decile and experiences a tax burden increase far greater than the relief experienced by the 99. I suspect that few would view this as a fair and equitable plan.
 Government uses econometrics to try to predict the positive or negative revenue impact of a tax proposal, using complex computer models that take into account a range of historic economic data and projections. The estimates, however, are generally "static" rather than "dynamic." This means that the estimates are generated in isolation, without taking into account most of the consequences of the change. So-called dynamic modeling attempts to take a more holistic view of the economic impact of a tax proposal, but as assumption is piled on top of assumption, the accuracy of the estimate steadily erodes. Accordingly, dynamic scoring is rarely used within government. The net result is that we are left with a surprisingly incomplete picture of the consequences of each tax proposal.
 The estate tax provides a good example of the polarity brought about by incomplete information. At the state level, opponents of the estate tax argue that it drives wealthy individuals to move to more tax-friendly states, thereby depriving the home state of the fruits of the economic activity (including job creation) that the wealthy would otherwise generate. Proponents of the estate tax argue that repeal would facilitate corrosive concentrations of economic power and result in a tax break for those most able to pay, thereby shifting the tax burden to lower income taxpayers. Proponents and opponents make plausible arguments but econometric modeling is limited in its ability to sift through fact and fiction and the deadlock persists. This same tension between tax cause and effect exists in nearly every tax policy debate.
 Yet another complicating factor, especially at the state level, is that changes to different kinds of tax types result in variable results to taxpayers. For example, imposing a sales tax on a widely-consumed commodity, like food, will be disproportionately borne by low income taxpayers in comparison to wealthy taxpayers. This is referred to as a "regressive tax" because "it falls more heavily on the poor, as a percentage of their income, than on the rich." By contrast, a tax "whose rates rise as the amount transferred or earned increases" is referred to as a "progressive tax." The federal income tax is a good example of a progressive income tax because the tax rate increases as the taxpayer's income increases. The social statement explicitly calls for "correction of regressive tax systems, so that people are taxed progressively in relation to their ability to pay". One commonly used measure of whether one or more taxes are progressive or regressive is the "Suits Index," which uses a mathematical formula to compute a number between +1 and -1, with +1 indicating a tax that is completely progressive, -1 indicating a completely regressive tax and 0 representing a proportional tax.
 Although the progressive-versus-regressive debate usually takes place within the context of whether the income tax or sales tax should be modified, note should be made of the property tax, which often generates substantial tax revenues at the state and local level. Maine's constitution, for example, generally requires that real property tax be imposed on the "just value" of the property, which is interpreted as the property's fair market value. If a property tax exclusion or deduction is granted to a class of taxpayers (typical examples would be charitable organizations or the elderly) then all other property owners will pay proportionately more property taxes. Whether or not this results in a "progressive" or "regressive" change to property tax depends upon the characteristics of the affected taxpayers.
 One intriguing real property tax policy debate in Maine has centered on Governor John Baldacci's proposed "real estate valuation freeze." Under the proposal, the value of a person's principle residence would "freeze" for purposes of calculating property taxes, thereby shielding the homeowner from increases in property taxes attributable to increases in the home's value wrought by inflation or market factors. The proposal is thought to favor older, more settled home owners because young families purchasing their first home would be subject to taxation on the full just value of the property, which could serve as a barrier to home ownership. Additionally, the proposal could result in two homeowners owning identical properties but paying markedly different levels of property tax based solely on the date the owner purchased the property and the length of time he or she owned it. Would this be regressive or progressive, fair or inequitable? It is difficult to forecast because of the many variables at play.
 The social statement addresses the effect of business tax policy on the common good in three ways by calling for: (1) policies that lessen the disparity between the compensation of executives and workers, (2) scrutiny of business tax incentives and (3) enforcement of laws to prevent the exercise of "inordinate market power" by large corporations. Executive pay disparity is at its most extreme in the United States, where an executive earns 475 times the amount of a factory floor worker. This dwarfs the pay disparity in other developed countries, like Japan (11 times), Germany (12 times), Canada (20 times) and Great Britain (22 times). The Institute for Policy Studies recently estimated that if the federal minimum wage had increased at the same rate as executive pay since 1990, the minimum wage would be $22.85 instead of the current $5.85. A sociologist would be better equipped than a tax lawyer to diagnose the social problems and costs inherent in a system in which the "haves" possess so much more wealth than the "have nots," but most would concede that extreme concentrations of market and economic power do not foster a society that is economically, sociologically or spiritually healthy.
The Underground Economy
 The social statement observes that "millions pursue economic activities that are part of the underground or informal economy, and are not counted in economic statistics." This raises two important points for all of us "Citizen Caesars" to consider. First, recognize that the government can only tax what it can track or what is voluntarily reported. By definition, the underground economy is difficult to track and persists due to a lack of voluntary disclosure. Examples would be tips and other unreported compensation (usually undertaken on a cash basis) as well as gains from illegal activity. A tax system that does not reach underground sources of income thus disproportionately and unfairly burdens non-underground taxpayers. One commonly proposed solution is to shift more tax burden to consumption taxes, like the sales tax, on the theory that underground income will be captured as the earners use it to purchase goods and services. This is by no means a perfect solution, however, because of the likelihood that such a system would be highly regressive and the possibility that consumption will occur outside of taxable channels (such as offshore transactions or unreported sales).
 A more subtle implication of the social statement's reference to the underground economy is that a complex tax system brings about a reduction in compliance and participation because of the cost (in time, money and frustration) for taxpayers to administer and comply with the system. The bewildering complexity of our federal and state tax systems if often discussed but rarely addressed. It imposes a real cost on our economy, albeit one that may be difficult to quantify. Again, Maine's recent tax reform debate provides an excellent illustration of this principle. One of the key lynchpins of the reform proposals was the expansion of the sales tax to cover an increased number of services, like home repairs, haircuts and amusements. Proponents argued that this was necessary in order to broaden and stabilize sales tax revenues and an acknowledgement that Maine's economy had become much more service-oriented than the manufacturing-based economy that existed when Maine's sales tax laws were originally enacted. Barbers, electricians and other micro-businesses, however, expressed deep outrage at the administrative costs and burdens they would incur in collecting sales tax on their services and were particularly galled that legislators declined to apply the proposed tax to legal and accounting fees. Accordingly, in evaluating the merits of a tax proposal, it is critical to consider those factors, like administrative burdens and disincentives to compliance, that are often not well developed in the revenue estimates but which nevertheless create real burdens.
 The social statement calls for "tax credits and other means of supplementing the insufficient income of low-paid workers in order to move them out of poverty." This is an oft-used tax policy technique for targeting tax relief to the persons perceived to be most in need. It is important to recognize, however, that a tax credit is literally a credit against taxes otherwise owed by the taxpayer. Therefore, someone who has no earnings (and hence may be in dire need for relief) will not receive any benefits from a tax credit unless it is "refundable," meaning that the credit is first applied against any tax liability owed by the person, with any unused excess paid as a refund to the person. Consequently, a refundable tax credit will arguably be more consistent with the call of the social statement than a non-refundable credit.
Ambiguity and uncertainty is the beginning, not the end.
 It would be easy (and eminently reasonable) to conclude that every issue of tax policy has a seemingly infinite number of points and counterpoints, innumerable potential unintended consequences and a degree of complexity best addressed by booking a one-way trip to the nearest deserted island. The social statement reminds us, however, that "our faith in God provides a vantage point for critiquing any and every system of this world, all of which fall short of what God intends." Recognizing that there are no easy answers to questions of tax policy is of great value because it helps us avoid quick fixes and knee-jerk reactions that lead to devastating unintended consequences. Instead, we should apply to tax policy the same practices of prayer and discernment that we are counseled to apply to other aspects of our lives.
 Discernment has been described as "the dynamic process of discovering God's call in every dimension of life. The process incorporates the whole person - head and heart, passion and logic, faith and doubt, challenge and mystery." As "Citizen Caesars" then we must commit to the hard work of studying and questioning tax proposals so that laws and policies can be enacted that are consistent with our Christian views of justice, fairness and equity. We must be engaged in the political process as active, informed participants.
 Participation can be as simple as writing to a legislator. I heard numerous Maine state legislators express the view that one constituent letter represents the same opinion of ten other constituents. Your views, therefore, are magnified tenfold in impact. Most states offer extensive online information regarding the text of proposals to help you become informed. Similarly, advocacy groups publish reams of information both pro and con on nearly every proposal. Their information will often not be balanced and objective, but nevertheless can provide a useful starting point in building your information base.
 Another more public step is to attend a public hearing or work session to express your views in person to legislators. In my experience in Maine, legislators were very respectful and solicitous of public comments. The most effective citizen advocates were those that could express their positions with directness, clarity, brevity and respect. Submitting written testimony as an adjunct to your oral comments increases the likelihood that your views will be considered by legislators.
 Mention should also be made of the wide ranging policy and advocacy services offered by the ELCA, including the ELCA's Washington office, the Corporate Social Responsibility program and the twenty state public policy offices staffed by the ELCA. All of these organizations provide critical information and a channel for involvement.
 The ELCA social statement provides a framework for discussing tax policy from a Lutheran perspective. It is often difficult to tell, however, whether or not a particular initiative is in harmony with the social statement because of the inherent complexity and ambiguity of tax policy and lack of clear and complete information. In a representative democracy such as ours, it is incumbent upon the citizens to embrace the responsibility of "being Caesar" and to become actively involved in understanding and shaping tax policy. As the Large Catechism states, "Creation is now behind us, and redemption has also taken place, but the Holy Spirit continues his work without ceasing until the Last Day, and for this purpose has appointed a community on earth, through which he speaks and does all his work." It is we, the Citizen Caesars, who are that community.
See Matt. 22:15-22; Mark 12:13-17; Luke 20:20-26.
, 2002-2003 ed., by Richard A. Westin, s.v. "regressive taxes."
Ibid., s.v. "progressive taxes."
The Suits Index is named after its developer, D. B. Suits, who formulated the index in 1977.
Me. Const., art. IX, § 8.
See www.maine.gov/tools/whatsnew/index.php?topic=Gov+News&id=28810&v=Article-2006 for Governor Baldacci's press release concerning the freeze. The proposal was introduced as Legislative Document 276 in the First Regular Session of the 123rd Maine Legislature but was not enacted. It has been carried over to the Second Regular Session for further consideration. For the text of the proposal, see janus.state.me.us/legis/LawMakerWeb/externalsiteframe.asp?ID=280022666&LD=276&Type=1&SessionID=7.
See PBS NOW content regarding executive pay, available online at www.pbs.org/now/politics/executivepay06.html. There is also increasing evidence of rapidly expanding disparity in pay between the topmost cadre of corporate executives and their subordinate executives. See Eduardo Porter, More Than Ever, It Pays to Be the Top Executive, New York Times, May 25, 2007, available online at www.nytimes.com/2007/05/25/business/25execs.html?ex=1337745600&en=59c9543d9b92883b&ei=5088&partner=rssnyt&emc=rss. For a summary of federal proposals aimed at reforming executive pay, see "Excessive CEO Pay: Background and Policy Approaches" by the Congressional Research Service, available online at digitalcommons.ilr.cornell.edu/crs/25/.
, "Half of top US executives made more than $8.3 million at S&P 500 companies examined by the AP," June 11, 2007. Available online at www.iht.com/articles/ap/2007/06/12/business/NA-FEA-FIN-US-Executive-Compensation.php?page=1
See the text of LD 1925, janus.state.me.us/legis/LawMakerWeb/summary.asp?ID=280025987 representing the Joint Standing Tax Committee's final tax reform package, and LD 850, janus.state.me.us/legis/LawMakerWeb/summary.asp?ID=280023470, which had the most expansive and highly developed provisions on taxing services.
Walter R. Bouman and Sue M. Setzer, What Shall I Say? Discerning God's Call to Ministry (Minneapolis: Evangelical Lutheran Church in America, 1998), 40.
The Maine State Chamber of Commerce recently published a very useful list of tips on testifying effectively before legislative committees. While the Chamber's list is oriented to Maine's legislative rules, it is highly adaptable to other legislative bodies. The list can be viewed at www.mainechamber.org/Impact07%20Pages/IM030807/IM030807%20Tips%20for%20Testifying.htm.
Creed 61, The Book of Concord: The Confessions of the Evangelical Lutheran Church, edited by Robert Kolb and Timothy J. Wengert, Fortress Press 2000.
Volume 7, Issue 9