Editor's Note: The following is a modified abstract of a paper presented at a conference held by Christ the King Law Center (CKLC) on October 8, 2016 titled Make America Catholic Again! Portions of this abstract were also taken from traditional Catholic attorney and author Christopher Ferrara's book The Church and the Libertarian: A Defense of the Catholic Church's Teaching on Man, Economy, and State.
Under Catholic teaching on "subsidiarity," a central governments excessive regulatory intrusions into local governments and the lives of individuals would be ended. To recall the teaching of Pope Pius XI in his encyclical Quadragesimo, "it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do. For every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them." 
Under the principle of subsidiarity, a true federalism could develop along Catholic lines, and when this principle is applied to the United States the several States could achieve true autonomy and even the ability to incorporate Gospel principles into civil law. The result would be similar to what existed in the Old Swiss Confederacy with its thirteen cantons, which were allegedly supposed to have been a model for the American Republic that succeeded the thirteen colonies.
Further, in keeping with the Church's teaching on just taxation, the federal income and inheritance taxes would be drastically reduced if not abolished entirely. As Pius XI taught, quoting his predecessor Leo XIII: "Wherefore the wise Pontiff declared that it is grossly unjust for a State to exhaust private wealth through the weight of imposts and taxes. 'For since the right of possessing goods privately has been conferred not by man's law, but by nature, public authority cannot abolish it, but can only control its exercise and bring it into conformity with the common weal.'" 
Federal corporate taxation, if it still existed, would provide generous incentives to treat employees as more than production factors, including such measures as a direct dollar-for-dollar tax credit for corporate profits invested in profit-sharing plans, medical savings plans, and so forth. Federal revenues would be devoted to legitimate federal purposes: the national defense and the maintenance of national public works, to the extent these are not returned to the jurisdiction of the States in keeping with subsidiary function.
 Quadragesimo Anno, n. 79.
 Ibid., n. 49.