WASHINGTON (RNS) — From a faith-based perspective, tax reform should put the most vulnerable at the forefront while seeking to distribute wealth according to what is moral and what is just.
It is an issue the Muslim community should be deeply invested in, and not written off as one decided along party lines.
A reform plan by House Republicans, to be unveiled on Thursday (Nov. 2), a day later than planned, promises to appease the party's wealthiest donors rather than provide any sort of relief to Americans who need it most.
Based on the Treasury Department’s vague nine-page “Unified Framework for Fixing Our Broken Tax Code,” the vast majority of the plan is geared toward lowering the tax burden on the wealthy and in a massive way. The enormous revenue gap that will result begs the question: Will our nation’s most vulnerable members be able to survive further deep cuts in social spending that are all but guaranteed?
The proposed new tax policy laid out in the “Unified Framework” puts forth a series of cuts and special cases that are most beneficial to the highest-income 1 percent. The policy cuts the corporate tax rate from 35 percent to 20 percent, eliminates the estate tax and reduces the number of income brackets from seven to three: 12 percent, 25 percent and 35 percent. In 2018, middle-income earners can expect a break of about $660 annually – 1.2 percent of their after-tax income, according to the Tax Policy Center. However, the highest-income 1 percent will gain an additional $130,000, or more than 8 percent on average. The 0.1 percent will receive an average of $720,000 or 10.2 percent.
Some will point to the provisions doubling the standard deduction, ending personal exemptions, simplifying tax filing by eliminating individual deductions and various loopholes, and an increase in the child tax credit as positive reforms that will benefit all. However, middle-class families can expect to pay for these provisions 10 years down the line when the overall tax burden bumps up for most taxpayers, as the additional credits for children are not indexed for inflation where personal exemptions were.
All in all, 50 percent of all of the plan’s tax cuts benefit the nation’s top 1 percent of earners, while middle-income households only receive 8 percent of the total benefit. Federal tax revenue will reduce as much as $2.4 trillion over the next 10 years. We know that the middle class and below will hardly benefit from this tax plan. What we don’t know yet is how the ensuing revenue gap will further hurt those who rely on social spending the most.
Leaders of politically active Muslim organizations should follow the example of U.S. Catholic bishops who, in their 1986 pastoral letter “Economic Justice for All,” put forth the clearest statement of Catholic thought on a morally sound tax system that is continually evaluated based on its impact on the poor.
The bishops wrote that no one below the poverty line should pay taxes; taxes should raise revenue adequate to pay for the public needs of society, especially to meet the basic needs of the poor; and taxes should aim to reduce inequalities of income and wealth in the United States. The bishops believed taxes should be structured so that those with relatively greater financial resources pay a higher rate of taxation.
This Catholic view aligns with the Islamic view that wealth should be distributed as widely as possible. In the Quran, wealth is given by God as a trust to ensure it is used to help the needy and less fortunate (57:7). It should not be used as “a perpetual distribution among the rich from among you.” (59:7). And virtue in Islam is not reflected in how much wealth is possessed, but by how much each individual gives back to society.
The protection of our fellow citizens and neighbors is not only an American duty but a moral duty as well, one from which Muslim Americans are not exempt. While 24 percent of Muslim Americans are likely to report household income of $100,000 or higher, 40 percent of Muslim Americans report household incomes under $30,000,
compared with 32 percent of the U.S. population as a whole. They are also less likely than the general public to fall into the middle range, between $30,000 and $99,999 – 35 percent of Muslims report household income in this range, compared with 45 percent of all Americans.
There is no doubt that tax reform is needed in the United States. The current tax code is full of endless provisions and loopholes that provide tax shelters and savings to those least in need of them. But the Trump administration’s proposal is not tax policy reform. It is a tax break for the wealthiest of the wealthy, one that has no moral or just basis. Faith-based and social justice organizations in the United States must ensure that our representatives take that perspective into account.
(Zara Ahmad is an attorney based in Los Angeles and a legal analyst for the Muslim Public Affairs Council. The views expressed in this opinion piece do not necessarily reflect those of Religion News Service.)