TODAY'S TAX SYSTEMS - And How They Will Be Changed
Tax time, as one poet called it, is "the cruelest month." While you're thinking of taxes, ask yourself how God views them — and then realize God has something far better.
NOTHING is so certain, so the saying goes, as death and taxes. Don't be so sure. Taxes are not eternal! In the World Tomorrow, man's taxing systems will be junked. Replaced by God's tithing system that has been in force from the beginning of human life — but of which most people know little or nothing! There are big differences between taxes and tithing. Man's system of taxation is "progressive." That means the percentage of tax goes up as your income goes up. If your taxable income is relatively small, your tax rate is small — in the U.S. system, about 14 percent. If it is large, say $100,000, your rate can go as high as 70 percent. God's system is far more intelligent: it is a flat percentage system. The word tithe means "tenth." A tithe of anything is the tenth part of it. It is a constant proportion. It is based on the fact that God owns all, but only claims a small part of the increase produced from the earth he created. Tithing is a system totally without "respect of persons." It treats the high income earners the same as the poor. The "progressive" system is based on envy of the more wealthy — it deals with people unequally, depending on their income. The tithing system is totally neutral toward who you are.
Keep It Simple...
Many, if not most people, get help filling out their income tax returns. Why is man's tax system so complicated? Almost all the complexity in our tax systems, believe it or not, stems from just one thing — the progressive rates! Because men did not model their tax structure on God's tithing system, they have fallen into suffocating confusion. High income earners, because of progressive rates, go through incredible exertions to have others — usually members of their own family — receive their money and pay the tax on it at much lower rates. They set up trusts. They make interest-free loans. They make everyone in the family (even the dog if they could) their "business partner." In God's system, it doesn't make any difference. Ten percent is ten percent — there are no advantages to having an artificially low income. Perhaps you have heard of "tax shelters." They represent the kind of silliness to which man's ideas lead. A tax shelter is, essentially, a glorified way to lose money! What happens is that a high income earner needs to find a way to "lower" his income, so he will be taxed at a lower rate. So he takes a little bit of his money, and uses it as down payment to buy into a business. Of course, he borrows the rest. And then what happens? The business proceeds to lose money! And that lost money offsets his other high income. How wasteful! Man's system encourages, important people to put money in losing ventures. Resources go into businesses that don't make as efficient use of them as otherwise. God's tithing system, on the other hand, doesn't have these destructive effects. By itself it allows businessmen to make the best economic decisions they can. They don't have to be constantly looking over their shoulder at complicated tax laws. From a purely economic point of view, God's system makes so much better sense than man's.
Tithing: A Capital Idea
The progressive system also complicates life in other ways. Say you buy a piece of property, wait ten years, and sell it. On selling it, you'll probably make a large profit over what you paid for it. If you were taxed on ten years worth of profit all in one year, it would not be fair — you'd probably have to pay a higher rate than you had been able to receive in your profit in ten equal parts. So, in response, man's system — at least in the United States — creates something called "capital gains." It is incredibly complicated. In a nutshell, though, all it means is that your profit on certain kinds of property is taxed at a lower rate than the rest of your income. Taxpayers go through tremendous exertions to have their profits classified as "capital gains" instead of just "ordinary" income. God's tithing system eliminates all this bother. The tithe is the same rate whenever your profit is high or low, or your profits taken in one year or every year. Again, God's system is so much simpler — so much more uncomplicated! Mathematicians would call God's system more "elegant."
Man's Marriage Tax
Today, in the United States, for example, the tax structure penalizes marriage when husband and wife both work. But if they just lived together, without being married, and filed single returns, the sum total of their separate taxes would be significantly less! In other words, the government penalizes such couples just for getting married. Thus man's tax laws (along with general moral permissiveness) encourages a great amount of sexual immorality. God's financial system is different. It doesn't encourage young working singles to live together. Ten percent is ten percent. God's system does not discriminate either in favor of or against people based on their marital status. Man's system further encourages a borrow-to-get-it-now attitude. American tax laws, for example, allow you to deduct interest from the income on which you pay tax. This, plus the progressive rates, means that a high income person is almost forced to go out and borrow as much as he can just to keep out of the jaws of his high bracket. God's system is so much saner! The decision to borrow money is made on its own merits. Because of the flat rate, the tithing system doesn't affect it one way or another. And certainly it doesn't give someone an incentive to buy something on credit just to be buying it as man's system does.
Of course, there are some similarities between God's tithing system and man's tax system. Both taxes and tithes take precedence over other debts. In American law, for example, the tax collector gets his money first — even before God! — and certainly before any of your other creditors get theirs if you can't pay all your debts. According to biblical law, the tithe is the debt you owe God. Being in debt is no excuse not to tithe — God's debt comes first. Importantly, God, unlike government tax departments, promises to specially bless those who pay their debt to him first! "Prove me now herewith," declares the Eternal God, "if I will not open you the windows of heaven, and pour out a blessing that there shall not be room enough to receive it" (Malachi 3:10). An interesting similarity is that the spirit, not the letter, of the law governs in both tax law and tithing. This may come as a surprise, but human tax courts will strike down elaborate schemes to minimize taxes — even if they conform to the strict wording of the laws! A business transaction, for example, which has no other purpose than minimizing taxes will usually be struck down. God's tithing system employs the rule of "substance over form." That means obedience to the spirit of the law, which means you tithe on an honest, good faith calculation of your income. You don't engage in all sorts of sneaky shenanigans to artificially reduce it.
Income and Increase
In God's tithing system, you tithe on the "increase." (See Deuteronomy 14:22 and 28) Increase is your adjusted gross income. And what is your adjusted gross income? The tax people have grappled with this concept for years now. The principles they have developed for determining what is "income" are generally good for determining what is your 'Increase" for tithing purposes. Basically, it's any increase in your wealth from your own efforts. Accordingly, a good rule is that if the tax people would make you include something in your taxable income you should also calculate God's tithe on it. You do tithe on profit from the sale of stock or your gross wages, just as you pay tax on them. But you would not tithe on inheritances (but the producer of a monetary inheritance should have paid tithes and would have paid tax on it). In the World Tomorrow, the tithing system will completely replace men's tax systems. There will be no more complicated rules on capital gains, no more desperate attempts to be taxed at a lower rate. If you want to know more about God's tithing laws, we have a booklet that explains them in much more detail. It is called Ending Your Financial Worries. It reveals the incredible blessings that God holds in store for those who obey his laws.