NOTE: this essay first appeared in the Fall 2020 edition of Ad Fontes, our quarterly journal. Subscribe to Ad Fontes in print and online here.

Along with many other Reformers, Martin Luther advocated taxation as an instrument of poor relief. Protestants today are divided on the advisability of using tax policy to redistribute society’s resources, but at the very least, an understanding of the place that Luther’s view of redistributive taxation occupies in the history of political theology might lead us toward a distinctly Protestant conception of taxation. That Luther wrote more about taxation than the other Reformers is perhaps not surprising. In his early political theology, Luther sharply differentiated between the ways in which Christians and non-Christians related to civil government and its laws. “Christians should be subject to the governing authorities and be ready to do every good work,” Luther wrote, because “in the liberty of the Spirit they shall by so doing serve others and the authorities themselves and obey their will freely and out of love.”^[2] Citing Matthew 17, Luther insisted that the “children of the king, who need nothing,” should nevertheless freely submit and pay “the tribute.”^[1] For the unbelieving subject, on the other hand, the “temporal sword” is a “terror,” restraining “the un-Christian and wicked so that—no thanks to them—they are obliged to keep still and to maintain an outward peace.”^[4]

Following the peasants’ revolt, Luther began drawing the line between the two kingdoms, the spiritual and the temporal, in a different way. Fearing anarchy, Luther felt obliged to refine his political theology so that it could accommodate intervention by civil authorities in ecclesiastical affairs. The two kingdoms no longer meant a simple distinction between church and magistrate; now even earthly church life became a part of the earthly kingdom. Luther’s two kingdoms theology had initially earned him the rebuke of Huldrych Zwingli and others, considering it dangerously close to the teaching of the Anabaptists, who believed that the government should not have any power over religious matters and that civil laws should not be imposed on Christians. However, as a practical matter Luther’s doctrine later came to resemble Zwingli’s Christian commonwealth.^[5]

“Luther was eager to place the task of relieving the needs of the poor in the hands of civil authorities”

Even before the peasants’ revolt, however, Luther was eager to place the task of relieving the needs of the poor in the hands of civil authorities.  He was deeply disturbed by how the church in his time handled poor relief—primarily through the system of almsgiving, which represented for Luther a particularly pernicious form of works righteousness. Calling for social reforms in his “Open Letter to the Christian Nobility of the German Nation Concerning the Reform of the Christian Estate” (1520), Luther urged the princes and nobility to eliminate the mendicant orders in their territories to help erase begging from the land.^[6] Luther’s views on poverty stand in stark relief against both the medieval system of almsgiving, with its promise of salvation to the generous, and John Calvin’s later insistence that poor relief form an integral part of the church’s mission. Luther’s conception of government-administered social assistance uniquely situated him to reflect on the use that the civil authorities could and should make of taxation in helping the needy. 

“Luther’s conception of government-administered social assistance uniquely situated him to reflect on the use that the civil authorities could and should make of taxation in helping the needy”

The Leisnig Ordinance

In September 1522, Luther traveled south from Wittenberg to assist the parish at Leisnig in preparing an ordinance for a “common chest.” The citizens and authorities of Leisnig had been impressed with Luther’s calls for social reform in his sermons and his “Open Letter,” namely (among many others), his requests that the princes forbid their subjects to pay the pope’s taxes, that the princes prohibit the alienation of German benefices, that they eliminate the mendicant orders from their territories to help erase begging from the land, and that they cease referring any temporal matters to Rome for adjudication. Luther not only helped draft the Leisnig ordinance; he endorsed it by writing its preface and having the two documents published together.

The ordinance provided for ongoing taxation to maintain funding of the common chest so that it could disburse money for relief of the poor:

We the nobility, council, craft supervisors, gentry, and commoners dwelling in the city and villages of our whole parish, have unitedly resolved and consented that every noble, townsman, and peasant living in the parish shall, according to his ability and means, remit in taxes … a certain sum of money to the chest each year, in order that the total amount can be arrived at and procured which the deliberations and decisions of the general parish assembly, on the basis of investigation in and experience with the annual statements, have determined to be necessary and sufficient…By the grace of God these practices have now been restored to the true freedom of the Christian spirit.^[7]

Not only was this ordinance probably the genesis of the modern welfare state in Germany and the Nordic countries, and not only did it influence how Western Europeans and North Americans eventually came to think of “state-funded social assistance,”^[8] it is also historically significant because (1) it anticipates the ability-to-pay principle of progressive taxation (“according to his ability and means”); (2) it distributes the chest’s funds based on need; and (3) the collection of revenue, maintenance of the chest’s funding levels, and distributions from the chest were to be carried out in a regular, universal, consistent, and methodical manner. ^[9]

Restoration of the practice of poor relief “to the true freedom of the Christian spirit” meant, for the drafters of the Leisnig ordinance, that the task of meeting the needs of the poor passed from the sphere of individual charity to that of political justice. This was not because Luther decried voluntary charity, but because he abhorred the abuses in the medieval system of poor relief, i.e., in almsgiving. As early as 1517, in the Ninety-Five Theses, he rejected the long-standing view that the poor are the treasure of the church, providing the rich with a “sin-redeeming” benefit through acts of charity. ^[10]

“Luther abhorred the abuses in the medieval system of poor relief, i.e., in almsgiving. As early as 1517, in the Ninety-Five Theses, he rejected the long-standing view that the poor are the treasure of the church, providing the rich with a ‘sin-redeeming’ benefit through acts of charity”

But there were deeper theological currents at work, too. Luther’s emphasis on the doctrine of communicatio idiomatum and the redistributive grammar of his theology of the Lord’s Supper underlie his vision for poor relief and, thus, implicate redistributive taxation—at least in the embryonic form that it took in the Leisnig ordinance.

Luther’s Theology of Redistribution

Through faith, Luther writes, the soul is united with Christ “as a bride is united with her bridegroom,” and, thus, “everything they have they hold in common, the good as well as the evil.”^[2] This “happy exchange” (fröhliche Wechsel) between Christ and the believer models the exchange between the two natures of Christ,^[12] and, therefore, Christ distributes to Christians the “prerogatives” of “priesthood and kingship” that he obtained.^[3] Christ’s distribution of the prerogative of priesthood carries the redistributive dynamic beyond the relationship between Christ and believer. Because priesthood implies a redistribution of what is received, Christians distribute to others what they have received from Christ. ^[4]

“Because the believer is distributee as well as distributor, she lives in a place of abundance”

Luther’s distributive logic turns the believer’s attention to the need of his neighbor. The “good things” flowing from Christ to the believer “flow on to those who have need of them.”^[5] Because the believer is distributee as well as distributor, she lives in a place of abundance, free from all the anxieties that would beset her if she were responsible for securing her own welfare. For Luther, the goods of the church are (or should be) common property, not because of a pre-existing state of communal ownership,^[16] but because “there is no greater service of God than Christian love which helps and serves the needy.”^[17] The common chest, therefore, was “for all who were needy among the Christians.”^[18]

Nor are the redistributed “good things” only spiritual: they include material benefits for the materially needy. Luther writes:

In this sacrament [of the Lord’s Supper], therefore, man is given through the priest a sure sign from God himself that he is thus united with Christ and his saints and has all things in common, that Christ’s sufferings and life are his own, together with the lives and sufferings of all the saints.… But in times past this sacrament was so properly used, and the people were taught to understand this fellowship so well, that they even gathered food and material goods in the church, and there—as St. Paul writes in I Corinthians 11—distributed among those who were in need.^[19]

After the peasants’ revolt in 1523, Luther might have become more reticent to analogize life in the temporal order to life in the church, but the early Luther, in “The Blessed Sacrament of the Holy and True Body of Christ, and the Brotherhoods” (1519), draws a parallel between communion in the sacrament of the Lord’s Supper and the common citizenship of those in political community.^[6] When resources are scarce, the neighbor’s needs are a threat and self-interest drives society. Justice becomes the resolution of conflict between each person’s self-interest, a matter of striking a balance between those interests. In Luther’s extended metaphor in “The Blessed Sacrament,” on the other hand, the fellowship with Christ and the saints in the Lord’s Supper “is like a city where every citizen shares with all the others the city’s name, honor, freedom, trade, customs, usages, help, support, protection, and the like, while at the same time he shares all the dangers of fire and blood, enemies and death, losses, taxes, and the like.”^[7]

But the Lord’s Supper is not merely a “figure” of solidarity and commonality; it is also a “sign” that the believer does, in fact, hold all things in common with Christ and the saints.^[8] A sign in this sense is something material that contains “something spiritual.”^[23] A sign, in Luther’s theology, is like a sacrament, except that it has no salvific effect.  Scripture, Luther writes, is full of signs “given along with the promises”—the sign of the rainbow given to Noah, the sign of circumcision given to Abraham, and the rain on Gideon’s fleece, to name just three.^[9] Material things mediate the Word, so that something accompanies the Word “to which we may cling and around which we may gather.”^[10]

In Luther’s theology, the Lord’s Supper, which is both sign and sacrament, erases the distinction between “the sacred and profane spheres,” according to Martin Wendte. It is the most salient example of the way in which “God and God’s Word are always working for humankind in a materially mediated way.”^[11] Communion discloses “God’s way of acting with all creation.”^[12]

In the Lord’s Supper, the distribution of the spiritual benefits Christ possesses is a means of salvation. The distribution of material goods to the needy is also a means of grace, though not in a salvific sense. The formal logic is the same; what changes in the shift from sacrament to “mere” sign is the soteriological content. Thus, Luther can affirm on the one hand that distributing “alms to the poor” and “food and other necessities … to the needy” is “quite another thing from the testament and sacrament, which no one can offer or give either to God or to men,”^[13] while bemoaning with equal force the fact that, in the Roman Catholic mass, possessions are not “given, with thanksgiving to God and with his blessing, to the needy who ought to be receiving them,” as Luther believed they had been in the practice of the Early Church.^[14]

Tax and Need

Luther was undoubtedly influenced by the understanding of the relationship between property and necessitas domestica

that prevailed in his world. Historian Renate Blickle brilliantly summarizes that understanding as it stood in late medieval and early modern Germany: “Domestic necessity” was a legal norm, not just a moral and social norm, dictating that economic resources in a society of scarcity be distributed according to the principle of need, defined in terms of household subsistence.^[30] The principle was both a sword against lords who lived luxuriously to the detriment of others and a shield against poverty for the peasants. Necessitasdomestica was an egalitarian principle, one to which all households of all ranks could appeal, so it was not tied to class.^[31]

Need, Blickle writes, gained legitimizing power through the concept of “subsistence,” just as freedom would later be justified by the idea of “property.” Need and property are both answers to the question “to whom do the goods of the world legitimately belong?”^[15] To those who need them, or to those who possess them legally but may not need them? The question remains the same; the two answers are based on drastically different foundational principles.

Blickle argues that the legitimizing concept of subsistence gradually gave way to the legitimizing principle of property in the eighteenth century. “Property as a private right,” according to Blickle, no longer included “any kind of responsibility toward another person. It was the legitimate right of its owner regardless of the needs of others.” The idea of the needs of the poor, to be sure, still has force in tax theory;^[33] ultimately, however, property became “a material guaranty and a manifestation” of the civil individual’s freedom, with the consequence that property was finally “elevated into a sacrosanct human right.”^[16]

Luther lived before the elevation of property into that kind of right. His thinking bears the imprint of necessitas domestica. That is not to say that he devalued private property. He was adamant, especially after the peasants’ revolt, that the Seventh Commandment (“Thou shalt not steal”) prohibits any form of interference with another’s property: “God forbids every kind of robbery, theft, and fraud, as well as sinful longing for anything that belongs to our neighbor.”^[17] But that is only what God “forbids.” Luther characteristically includes in his catechism what the Seventh Commandment “requires” as well, namely, that “[w]e should help our neighbor to improve and protect his property and business” and “help him in every need.”^[36]

How can Luther’s theological reasoning for a redistributive form of taxation to meet the needs of the poor help us formulate tax policy today? How might Luther help us develop a distinctively Protestant theory of taxation which nevertheless possesses broad appeal?

Equity and Efficiency

Taxation is generally regarded as having three uses: (1) to fund the provision of public goods and services; (2) to influence the behavior of the members of society; and (3) to redistribute resources directly or indirectly. The third use—redistribution—is the most controversial of the three, at least in American discourse, and it has surfaced as a matter of urgency and contention in recent political debates and as a result of the coronavirus pandemic.[7] 

“Redistribution has surfaced as a matter of urgency and contention in recent political debates and as a result of the coronavirus pandemic”

Equity and efficiency are the two standards by which tax systems are typically judged. A tax system is “efficient” if it collects the amount of revenue that the state needs with as little impact as possible on the decisions taxpayers make. The meaning of “equity” is less clear. It often refers to “vertical equity,” which means that those with greater ability to pay should pay more taxes. The idea of vertical equity exerts powerful influence in liberal democratic societies because of the happy coincidence that imposing higher rates of tax on those with more income or wealth (which seems fair) does the least amount of damage to economic productivity (which seems to be in everyone’s interest). Equity and efficiency are taken to converge in progressive tax (especially income tax) rate structures, justified by the “ability-to-pay” principle.^[37]

In the context of the ability-to-pay principle, the term “equity” means little more than fairness, that is, how fairly the tax burden is allocated. We can call this “thin” equity. Sometimes, however, “equity” can refer to “thicker” equity, i.e., a move toward greater economic equality or at least less inequality. Prominent among “welfarist” approaches, which give thicker accounts of equity than the ability-to-pay principle, are the “optimal” tax models: formulas that offer a three-step method for arriving at the “optimal” balance between equity (in the thick sense) and efficiency. First, set the state’s revenue target; second, determine the society’s “social welfare function” (i.e., a ranking of social outcomes, typically reflecting how inequality-averse the society is); and third, use the resulting degree and curve of progressivity, proportionality, or even regressivity in tax rates as benchmarks against which to judge the equity and efficiency of actual taxes. ^[38] 

Policy has not followed theory. In recent U.S. tax policy, inequality-aversion has remained low. So have top marginal individual income tax rates. It has proved easier to shift the equity component of tax-and-spending arrangement to the spending side. As of 2018, three-quarters of redistribution at the federal level occurred through spending and only one-quarter through tax itself, i.e., most redistribution occurs through money being given to the poor, not through progressive income tax rates.^[39] Especially since the popularization in the 1980s of the “Laffer curve,” which showed that there is a tax rate somewhere between 0% and 100%, but much closer to 0% than to 100%, that maximizes government revenue, many Americans have assumed that lowering taxes can increase revenue.

Regardless of the validity of this assumption, it reflects an important social belief, prominent among welfarists in the United States and many other liberal democracies, namely, that society as a whole is better off materially when the tax system preserves the maximum amount of private wealth and creates conditions for the maximum amount of private wealth-creation. This belief entails a strong commitment to efficiency. Thus, once equity in either its thick or thin form is taken to merge with efficiency, equity is no longer a separate variable in the tax balance. It is seen, rather, as a fortuitous byproduct of the alliance between government and job-producing, wealth-creating large corporations and top income-earners.

Tax and Property

All that has been said up to this point about U.S. tax policy can be reduced to one phrase: the government should interfere with property rights as little as possible. To do more, the narrative runs, works to everyone’s detriment. The state achieves social justice by honoring private property.

Recognizing that both the state and the agents of wealth-creation may, in fact, operate with less benign motives than welfarists assume, other tax theorists seek to attenuate the inviolability of property rights. They propose a measure of redistribution, however modest. To do so, they must defend the claim that some person or entity other than the possessor of property is morally and legally entitled to some of that property.

One such “attenuation” approach is conventionalism. Popularized in the The Myth of Ownership, Liam Murphy and Thomas Nagel reject “everyday libertarianism” in favor of this oft-cited view: “Private property is a legal convention, defined in part by the tax system; therefore, the tax system cannot be evaluated by looking at its impact on private property, conceived as something that has independent existence and validity.”^[40] Conventionalism abandons natural or moral rights to property but preserves legal rights to property. It does so, however, with few safeguards against the elimination of those rights. In other words, it does not offer as robust an account of the good of private property as Luther and other Reformers believed to be included in the seventh commandment.

Catholic Social Teaching (CST) is another “attenuation” approach, but one that moves in a different direction. CST’s founding statement, Rerum novarum (1891), and its successor encyclicals have affirmed four core principles: the common good, the “universal destination of goods,” subsidiarity, and solidarity. The first two are the most important for redistributive taxation. Unlike conventionalism, CST affirms a “natural,” pre-political right to private property that the state must protect. At the same time, however, that right must be balanced by the universal destination of goods. In Quadragesimo anno (1931), Pope Pius XI affirmed “the twofold character of ownership, called usually individual or social according as it regards either separate persons or the common good.”^[41] When quoting Rerum novarum, Pius specifically omitted language that had called the state “unjust and cruel if under the name of taxation it were to deprive the owner of more than is fair.”^[42] Instead, Pius wrote:

But not every distribution among human beings of property and wealth is of a character to attain either completely or to a satisfactory degree of perfection the end which God intends. Therefore, the riches that economic-social developments constantly increase ought to be so distributed among individual persons and classes that the common advantage of all … will be safeguarded; in other words, that the common good of all society will be kept inviolate.^[43]

Within the CST tradition, the pendulum has swung back and forth between greater stress on the state’s protection of private property and a greater emphasis on redistribution in light of the fact that all property is under a “social mortgage”; ^[44] but it seems fair to say that a balance between those two goals is required and that taxation is an important means—if not the primary instrument—of striking that balance. Throughout the CST tradition, however, “the exact point of equilibrium” between “the right of legitimate owners and their duties toward others” depends on the requirements of the common good.^[45] “The frontiers among ‘charity,’ ‘commutative justice,’ ‘distributive justice’ and ‘general justice,’ and the precise meaning of ‘social justice’ are not always clear or stable.”^[46]

These unanswered questions in CST illustrate the difficulty in “attenuated” approaches to redistributive taxation: whenever rights to property are balanced against each other, they conflict. The question remains: when, how, and in what quantity may the goods of one person be reallocated to other people?

As vague as the principle of the common good is, it remains a strength of CST. Policy can be developed between the guardrails set in place by universal destination, property rights, subsidiarity, and solidarity. These guidelines serve as correctives to both the individualist (efficient) and utilitarian (equitable) commitments that our society’s dominant narratives try to balance. Protestantism has not preserved as specific a conception of the common good as CST, and it therefore struggles to mediate among competing values in the societies in which it finds itself. Protestants tend to adopt other dominant political views, whether market conservatism or redistributive progressivism, rather than thinking through these issues as Protestants.

“Thick Equity”

That said, on the question of tax justice, Reformation theology does supply the conceptual resources for formulating an ethical account of taxation. I do not mean to suggest that such an account should compete with CST, but that perhaps it can complement CST. Different readings of “the universal destination of goods,” an important principle in CST, are available. However, CST has arguably not been entirely consistent on whether it favors “thin” or “thick” equity. Pope Leo XIII’s Rerum novarum (1891) offered a strong defense of “the right to private property against the overreaching of the socialist state.” Leo’s position was nuanced or at least clarified, however, in later encyclicals, which acknowledged “some right of the state to use legal means to redistribute riches as a requirement of the common good.”^[47] If a Luther-inspired, sacramentally-driven political theology is permitted to touch on the question of taxation and equity in our contemporary discussions, it has the potential to re-center “thick” equity in those discussions.

Luther’s theology of redistribution, manifested in the ongoing collection of tax to fund the common chest, might shape the way we think about tax in three ways, among others. Luther was careful to distinguish his remarks about taxation that were written specifically for true Christians from his remarks written for society as a whole. Taxation is a mercy to the righteous, enabling them to disclose the distributive pattern of God’s own mercy to the needy; but to the unrighteous it is a divine visitation to “teach [them] manners.”^[48] The three ways in which his theology can shape our approach to tax likewise pertain to different audiences.

First, for policymakers, a theory of tax informed by Luther’s communal Eucharistic theology will be dynamic, responding to changing circumstances. In a purely secular “theology” of taxation, the authorities are unlikely to reevaluate the needs of society’s disadvantaged members on an ongoing basis. In a neoliberal context, the tax laws are set, once a balance is struck between the demands of economic growth and the state’s revenue needs, until a new administration, with different economic policies, changes them. The dynamism of Luther’s Eucharistic theology, while far from countenancing the abolition of private property, relativizes private property by exulting in the overflow of good things that results in redistribution of material resources to the poor. The amount of revenue to be collected will constantly be re-examined, and the objects of government spending will be subject to change. The resulting tax will look like an optimal tax that gives absolute priority to those below a predetermined income-and-asset threshold by making them the primary recipients of revenue raised through taxation.

Secondly, for a specifically Christian audience, such a tax theory will take little account of merit or responsibility. The believing taxpayer is free to view the tax-and-spend system without anxiety and without an overly scrupulous attachment to “strict human justice.”^[49] Confronted with the dangers of abuse in such a system, Luther replied, “We have to expect that greed will creep in here and there. So what?”^[50] Luther did not countenance any measure of greed, of course. He meant that it was better for Christians to err on the side of generosity than to err on the side of withholding resources from those in genuine need.

“A tax system underwritten by a theology of gracious distribution and redistribution—although, admittedly, not necessarily one that requires a theology of the Lord’s Supper to underwrite it—will reorient the idea of social justice away from equilibrium among competing social commitments and toward a web of interpersonal duties”

Finally, of relevance to both policymakers and Christian citizens, a tax system underwritten by a theology of gracious distribution and redistribution—although, admittedly, not necessarily one that requires a theology of the Lord’s Supper to underwrite it—will reorient the idea of social justice away from equilibrium among competing social commitments and toward a web of interpersonal duties. It will have that effect for three reasons. First, it will direct tax policy away from a mere balancing of the dictates of economic growth and general administrative needs of the state and toward a balance that explicitly takes into account mitigation of poverty. Secondly, without questioning the rightful place of charitable giving, redistributive taxation motivated by any political or theological commitments is far more likely to meet the needs of the poor than voluntary charity alone could. Thirdly, redistributive taxation avoids the awkward power differential between rich and poor that voluntary giving perpetuates and the resentment that unequal willingness to give on the part of the well-off can engender.^[51] This vision of taxation can orient Christian members of society toward Luther’s theology of neighbor-love. Once the neighbor’s well-being is understood as a duty, and tax-paying as a means of fulfilling that duty, tax-paying becomes an act of love toward others.

Allen Calhoun (Ph.D., University of Aberdeen; J.D., University of Notre Dame) is a McDonald Distinguished Fellow at the Center for the Study of Law and Religion at Emory University. After twenty years working as an attorney and a writer and editor in the legal profession, he is currently researching and writing at the intersection of law and theology. His book tentatively titled Tax Law, Religion and Justice: An Exploration of Theological Reflections on Taxation is forthcoming from Routledge.