Taxing the Rich
Each year, except in Covid times, the business and political elite gather in Davos, Switzerland. Nothing new in that. But this year a group of millionaires are demanding that governments "tax us now" to tackle the huge and expanding gulf between rich and poor.
...The unlikely protesters, who describe themselves as "patriotic millionaires", called on world leaders attending the annual conference yesterday to introduce fresh taxes on the wealthy to tackle the "cost of living scandals playing out in multiple nations around the world".
Phil White, ... a member of patriotic Millionaires UK, said: "While the rest of the world is collapsing under the weight of an economic crisis, billionaires and world leaders meet in this private compound to discuss turning points in history. It's outrageous that our political leaders listen to those who have the most [but] know the least about the economic impact of this crisis, and many of whom pay infamously little in taxes. The only credible outcome from this conference is to tax the richest and tax us now. Tax the delegates attending Davos 2022."
Marlene Engelhorn, an heir to the founders of the BASF chemical company, said "Our governments continue to do nothing to address gross inequalities and instead meet behind closed doors in this spectacle of private wealth. We have hit the end of the line when another quarter of a billion people will be pushed into extreme poverty this year."
The theme of the first-in-person WEF [World Economic Forum] gathering in more than two years, because of the pandemic, is "working together, restoring trust".
Djaffar Shalchi, a Danish multi-millionaire engineer and property developer, said: "You don't win people's trust by holding events like Davos, where the world's rich and powerful meet behind layers of security. The most significant thing Davos participants could do to win people's trust is to acknowledge that the wealth and privilege they represent and protect is incompatible with a world where everyone can live full and prosperous lives."
(Rupert Neate, The Guardian, 2022)
This is not the first time that the issue of raising the tax on super wealthy individuals has been raised. See below.
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Raise Taxes
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| Widow Costard's Cow and Goods, Distrained for Taxes, are redeemed by the generosity of Johnny Pearmain Edward Penny (1714-1791) Yale Center for British Art [Public Domain] |
According to Oxfam the wealth of the world's 10 richest individuals has risen by £400bn since the start of the pandemic. That sum could apparently vaccinate every adult on Earth, as well as restore to the world's poorest people the income they lost in 2020... It is hard to quarrel with the report's conclusion that current economic policies have enabled "a super-rich elite to amass wealth in the middle of the worst recession since the Great Depression, while billions of people are struggling to make ends meet.
Political economists on both the left and the right are coming to the conclusion that the gap between rich and poor people is destabilising and dangerous to democracy...The world is getting less equal...
Vague Oxfam exhortations that we need to "shape more equal societies" are unlikely to get anywhere. Whatever Davos may pretend, the world does not have one government or one tax regime, let alone one ideology...
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| Duty Paid Ralph Hedley (1848-1913) Photo Credit:Sunderland Museum & Winter Gardens [CC BY-NC] |
The world's most successful industries - largely the concern of the top 10 wealthy individuals - are still operating virtually tax-free. The reason at root is that these industries are global, while taxation is national. Tax regimes tend to be deeply conservative, continuing to undertax wealth, notably property, and overtax lower and middle incomes. Fiscal authorities, such as Britain, are also cynically indulgent towards tax avoidance and money laundering, while loading taxpayers with regressive imposts such as council tax and VAT...
It is for governments to try to track down and police those who, far from not paying enough tax, pay little or none at all. They grow rich by keeping their wealth offshore...
There are three possible answers to the question of how to increase the contribution of the super-rich:shrug, shame or tax . Shrug is easy. It has ruled policy in Britain ever since the days of 80% surtax ended in the 1980s. Shame is dubious...
As for higher personal taxes, Oxfam argues that if Argentina can levy a one-off emergency surtax on its 12,000 richest citizens, so surely can the richer countries of the world...A surtax must be the answer.
(Simon Jenkins, The Guardian, 2021)
(See Wealth Gap, Jan 22, Taxing Millionaires, Jan 15 and Tax Rises, Oct 6, 2020)
*A one-off tax on Argentina's richest people comes into effect to help pay for medical supplies and relief for businesses struggling due to Covid-19.
Those with assets of more than 200 million pesos ($2.3m; £1.67m) will have to pay about 3% on assets declared within the country and over 5% on assets held abroad.
It will apply to around 12,000 people.
The government hopes to raise around $3bn. The money will also help fund scholarships and social aid.
Senators passed the one-off levy - dubbed the "millionaires' tax" - by 42 votes to 26 in December.
The measure brought in by centre-left President Alberto Fernandez has been criticised by the opposition which described it as "confiscatory".
There have also been concerns raised by the Argentine Rural Society that the tax could be made permanent.
But the country has been badly hit by the pandemic, which has deepened already high rates of poverty. Almost 40% of the country's population lives under the poverty line, while the unemployment rate sits at 11%.
Oxfam's annual report on economic inequality said Argentina was showing the way towards progressive taxation of the rich as the key to an equitable recovery from the current crisis.
"A tax on the excess profits earned by corporations during the coronavirus pandemic could generate $104 billion - enough to provide unemployment protection for all workers, and financial support for all children and elderly people in the poorest countries," the report stated.
Argentina has almost two million confirmed cases and more than 47,000 deaths from the virus.
(BBC News, Latin America, 2021)
*Sir, Paul Johnson's article made some good points about simplifying and reforming the tax system to assist in raising the revenue to help to repair the nation's finances. However, he avoided touching on one particularly sensitive point: that the basic rate of income tax used to be 25 per cent. The governments of John Major and subsequently Gordon Brown reduced the rate to 20 per cent while failing to recognise the future cost of an ageing population and healthcare needs. If we want to afford the level of public services that people demand then taxes on all incomes surely need to be raised, perhaps with an increase in the personal allowance to ensure that the poorest in society are unaffected.
(DJB Shearer, Glasgow, The Times, 2021)
*The revelation last week that the 25 richest US billionaires have paid very little tax even as their fortunes have soared has reignited demands for wealth taxes on both sides of the Atlantic...
Jeff Bezos - founder of Amazon and world's richest person, with a $193bn (£136bn) fortune - paid no federal taxes in 2011 and even claimed $4,000 in tax credit for his children.
The second wealthiest person - the head of Tesla, Elon Musk - paid no tax in 2018 because he took out vast loans against his shareholdings and deducted the interest costs he paid on the loans from his taxes.
Warren Buffet, the famed investor who has pointed out that he pays less tax than his secretary and called for reform of the system, paid an effective tax rate of just 0.1% between 2014 and 2018.
"It may sound shocking," says Arun Avani - assistant professor at the University of Warwick's economics department... "but all of this is perfectly legal, and not surprising to anyone who has spent any time thinking about the wealthy and tax"...
"The scandal here isn't that they broke the rules - they didn't. It's that the rules are so bad." ...
Robert Palmer, executive director of the campaign group Tax Justice UK, says: "The richest British people will be using exactly the techniques exposed in the ProPublica leaks. If you're an ordinary person you can't do that, as tax comes out of your monthly pay cheque. This is deeply unfair."...
Morris Pearl, chair of Patriotic Millionaires, a group of very rich people campaigning for higher taxes to be applied to them and other members of the elite, says the report shows that the rich can "basically choose whether to pay taxes or not."
"As a millionaire, I know personally that our economy enshrines wealth for the few - to the detriment of ordinary people in our country"...
(Rupert Neate, The Observer, 2021)
A scandal that never goes away because of the inaction of those in power.
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