As state governments tighten their budgets and consider fiscal changes to handle the recession, religious leaders in some states complain that the poor are being adversely impacted by tax policies. In April, new budget policies in Virginia and a failed attempt to change policies in Alabama both drew the ire of Baptists and other religious leaders.
As part of the budgeting reduction efforts in Virginia, the General Assembly and Republican Gov. Bob McDonnell approved a provision that impacted the state’s handling of the Earned Income Tax Credit (EITC). The EITC, a refundable tax credit that assists low-income workers, was praised by former President Ronald Reagan as “the best anti-poverty program ever created.” The Virginia change is estimated to increase taxes on 114,000 families who earn less than $49,000 annually.
The Virginia Interfaith Center for Public Policy, which bills itself as the “oldest faith-based advocacy group in Virginia,” quickly criticized the new budget provision. The center’s current leader is Cooperative Baptist Fellowship minister Charles Baugham. Groups involved with the center include the Church of the Brethren, Episcopal Diocese of Virginia, Roman Catholic Diocese of Arlington, Richmond Rabbinic Council, Virginia Conference of the United Methodist Church, Virginia Muslim Coalition and the Virginia Synod of the Evangelical Lutheran Church in America.
“The state should find more innovative ways to save money than reducing the percentage of EITC-eligible families that take advantage of the credit,” argued Joe Stanley, the director of the center’s environmental program known as the Virginia Interfaith Power & Light. “I would hope, as this issue gains more attention, that [McDonnell] would regain his consistency on the issue and not look the other way when tax relief is being cut on those that likely did not support him in the election and new relief is given to those who likely did.”
While religious leaders in Virginia protest against a new tax policy that hurts poorer workers, religious leaders in Alabama have been fighting against an old tax policy that disproportionally impacts poorer families.
Alabama Arise, a coalition of more than 150 congregations and community groups, promoted legislation to eliminate the 4 percent state sales tax on groceries. Churches supporting the group come from many denominations, including Baptist, Catholic, Church of God, Disciples of Christ, Episcopalian, Presbyterian and United Methodist.
Earlier in April, Republicans in the Alabama House of Representatives defeated the measure to eliminate sales tax on groceries and over-the-counter medicines – as they had four times last year. Alabama Arise has pushed this legislation for 12 years. Alabama and Mississippi are the only states that maintain the full sales tax on groceries.
The revenue lost from the change would have been paid for with a cap on state deductions for federal income taxes paid. Alabama Arise claimed it would have cut taxes for 96 percent of Alabama taxpayers. Only couples making more than $200,000 or individuals making more than $100, 000 would pay a net of 1 percent more of their income in taxes. Currently, the bottom 20 percent of wage earners in the state pay more than 10 percent of their income in taxes while the top 1 percent pay only 4 percent.
Jim Evans, pastor of Auburn First Baptist Church in Auburn, Ala., and columnist in newspapers and EthicsDaily.com, offered his support for the Alabama Arise effort. His church is a member group of Alabama Arise.
“The impact of the high sales tax is most immediately felt by the poor,” Evans argued. “The effort by Alabama Arise to help this situation by ‘untaxing’ groceries was driven by an awareness that the poor spend a much higher percentage of their income on food than middle and high-income families.”
Evans noted that the problem in Alabama is that state legislators are restricted by the state’s constitution from changing property tax rates without a constitutional amendment. Evans and Alabama Arise argue that a new state constitution is needed.
“The legislature, sadly, did not have the will in this bizarre anti-tax climate we find ourselves in to push through this modest tax increase,” Evans added. “It would affect mostly upper income families, but in this strange time we find ourselves in, even people not affected by a tax increase are opposed to it.”
Although anger against taxation continues to build nationwide at “tea party” rallies, the actual tax rate for Americans is at a low rate compared to rates of the past several decades. Most Americans do not realize that the tax rate is actually lower than it was when President Barack Obama assumed office last year. Tax policies changed over the past year include an increased federal EITC and other efforts to help lower and middle-income Americans.
Brian Kaylor is a contributing editor for EthicsDaily.com.