Wednesday, August 31, 2011

Wealthy people acting for tax justice

The UK newspaper The Guardian has published this article, Tax us more, say wealthy Europeans, which reports how, after Warren Buffett put out a call to stop coddling the super-rich, Liliane Bettencourt, France's richest woman, "signed a letter along with 15 other billionaires begging to make a special contribution to the treasury to help drag France out of the financial crisis". Luca di Montezemolo, the chairman of Ferrari, is joining the call to pay a fairer share of tax. Spain is considering the reintroduction of a wealth tax.

Two years ago, a group of 50 wealthy Germans called on Angela Merkel's government to rethink its taxation policies. Currently the richest Germans are taxed a maximum of 42%. The previous chancellor, Gerhard Schröder, lowered the top tax rate from the 53% ceiling set by his predecessor, Helmut Kohl.
The German group, Vermögende für eine Vermögensabgabe (The Wealthy for a Capital Levy) is the latest manifestation of a feeling among some well-off individuals that the spare cash in their bank accounts might be able to ease, if not solve, the financial crises threatening to cripple their countries.

"None of us are in Buffett's or Bettencourt's league," said the founder, Dieter Lehmkuhl, a retired doctor with assets of €1.5m (£1.3m). "We're a broad church – teachers, doctors, entrepreneurs. Most of our wealth is inherited. But we have more money than we need."

Lehmkuhl explains:

"I would say to Merkel that the answer to sorting out Germany's financial problems, our public debt, is not to bring in cuts, which will disproportionately hit poorer people, but to tax the wealthy more"

"Something needs to be done to stop the gap between rich and poor getting even bigger."

However, all is not rosy on this front. For example:
Last week in France Nicolas Sarkozy proposed a similar idea: a temporary tax on the very rich. This would arrive in the form of an "exceptional contribution" of 3% on taxable earnings for those earning above €500,000. It will probably only last until 2013.

The initiative has been attacked as an empty stunt before it has even kicked in – even by some in his own party. The left deemed it a smokescreen to hide the fact that Sarkozy has given away billions of euros in tax breaks to the rich while this new measure will yield only €200m. Chantal Brunel, an MP for Sarkozy's own ruling rightwing UMP party, said that there must be higher permanent tax levels for "big fortunes" because "the rich must participate more".

Whilst we applaud the call by wealthy people to pay higher taxes, and we are certain that many amongst them have a genuine intent for good, there may be questions to ask of some. We find it curious, for example, that Warren Buffett has just injected US$ 5 billion into the struggling Bank of America, when this bank is a prime culprit in the tax dodging business. Also, in France, Liliane Bettencourt has been accused of hiding funds offshore to evade taxes in a story connected with political scandal.

However, as said, we are encouraged that some rich people genuinely want to do the right thing. Since proponents of the secrecy system for tax "minimisation" purposes tend to be wealthy and internationally connected, we find it heartening that there are those with wealth who are forming a movement, around the globe, to act for tax fairness.

So far, we're hearing calls coming from France, Germany, Italy, Spain and the USA - we will be glad to hear news of more.


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