Tax us more, say wealthy Europeans
German group latest to volunteer for higher contributions, saying country could raise €100bn in two years with a 5% wealth tax
[Helen Pidd in Berlin guardian.co.uk, Monday 29 August 2011 20.37 BST]
First it was Warren Buffett announcing that he and his chums had been “coddled long enough by a billionaire-friendly Congress”.
Then Liliane Bettencourt, France’s richest woman, who was at the centre of a tax scandal last year, 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.
Even an Italian got in the action, with the boss of Ferrari saying that as he was rich, it was only “right” that he stump up more cash.
Now, as both France and Spain consider introducing a wealth tax, a group of 50 rich Germans have joined the “tax me harder” movement by renewing their open call to Angela Merkel to “stop the gap between rich and poor getting even bigger”.
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.”
The group’s manifesto claims Germany could raise €100bn (£88.5bn) if the richest paid a 5% wealth tax for two years.
On Monday, Lehmkuhl said he was renewing his call, first issued two years ago, to 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.
“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,” said Lehmkuhl. “We are always hearing about savings packages, but never tax rises. Yet tax increases are a way out of this mess. That’s where the money is: rich people.
“Something needs to be done to stop the gap between rich and poor getting even bigger.”
Under his group’s plans, the new tax would only affect individuals with more than €500,000 in capital wealth. All money over that ceiling would initially be taxed at 5% for the first two years and thereafter at 1% or more.
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”.
In Italy too, one of the country’s richest citizens has come forward to offer to pay more tax — but only if Silvio Berlusconi’s government embarks on a wide-ranging programme of neo-liberal reform.
Luca di Montezemolo, the multimillionaire Ferrari chairman, made his offer in an interview with the centre-left daily La Repubblica earlier this month.
Montezemolo, 63, who has long been suspected of harbouring political ambitions, said he wanted to see the government raise cash by means of property sales and reductions in the perks of Italy’s pampered politicians. “Then, but only then, a contribution on the part of members of the public is needed,” he said. “You have to begin by asking it of those who have most, because it is scandalous that it should be asked of the middle class.”
He said that even before the markets were swept this month by concern over Italy’s giant public debt, he had proposed a surtax on annual incomes of between €5m and €10m. But it had met with a “deafening silence”.
In Spain, the Socialist government is reported to be considering the reintroduction of a wealth tax scrapped just three years ago. Experts say the tax on assets, not including a first residence, would produce upwards of €1bn of revenue from just 50,000 rich individuals. Finance minister Elena Salgado is on record as saying she regrets the demise of the tax.
Alfredo Pérez Rublacaba, the new Socialist candidate for prime minister at the 20 November general election in Spain, has already pledged to hike taxes on the rich if elected.
In the US, Buffett has been mocked for his admission in the New York Timesthis month that he felt bad about only paying $6.9m in tax last year, 17.4% of his taxable income, while his staff paid an average of 36%.
He suggested income and investment tax rates should be raised on those making more than $1m in taxable income? 0.2% of people who filed tax returns in 2009. The article attracted fierce criticism. “Warren Buffett, hypocrite,” was the headline in the New York Post. “He cares more about shilling for President Obama ? who’s practically made socking ’millionaires and billionaires’ his re-election theme song ? than about kicking in more himself,” the paper said.
Harvey Golub, former chief executive of American Express, told the Wall Street Journal: “Before you ’ask’ for more tax money from me and others, raise the $2.2tn you already collect each year more fairly and spend it more wisely.”
Additional reporting by Angelique Chrisafis, John Hooper, Giles Tremlett and Dominic Rushe
Squeeze the rich
A “squeeze the rich” tax increase in the UK is unlikely despite the fiscal sacrifices offered by moneyed citizens in the US, France and Germany. The 50p rate introduced by the Labour government is more likely to be scrapped in a few years’ time rather than be raised. George Osborne said in his March budget that the 50p rate on taxable income greater than £150,000 per year would inflict “lasting damage” on the economy if it became permanent, laying the ground for its withdrawal in the medium term.
The Centre for Policy Studies, a centre-right thinktank, said there was a huge difference between generosity, as practised by Warren Buffett, and compulsory taxation. Tim Knox, director of the CPS, said: “In the UK there is little evidence that the 50p tax rate is bringing in extra revenues for the Treasury, while it arguably reduces growth by cutting incentives to one of the most entrepreneurial sectors of the economy. Thus, in the long term, higher taxes on the rich can hit the less well-off most because less wealth is being generated and put into the economy. So while the generosity and philanthropy of the super-rich should not be questioned, whether their good intentions will produce the desired effect is a completely different matter.”
Len McCluskey, general secretary of the Unite union, said the public is being “softened up” for the abandonment of the 50p rate. “This government is impatient to ditch it because it believes wealth can be clasped by the few,” he said.
Stop Coddling the Super-Rich
[By WARREN E. BUFFETT Published: August 14, 2011]
OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
Last year my federal tax bill ? the income tax I paid, as well as payroll taxes paid by me and on my behalf ? was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income ? and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.
If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine ? most likely by a lot.
To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.
Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.
I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone ? not even when capital gains rates were 39.9 percent in 1976-77 ? shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.
Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion ? a staggering $227.4 million on average ? but the rate paid had fallen to 21.5 percent.
The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)
I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.
Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.
Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.
But for those making more than $1 million ? there were 236,883 such households in 2009 ? I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more ? there were 8,274 in 2009 ? I would suggest an additional increase in rate.
My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.
Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.
Montezemolo : I am rich it is right that you pay more
[Written by ironmusc on August 18, 2011 under Featured News]
Ferrari president on the contribution provided by the government for income exceeding 90 000 euros: “But just here I think so. I agree with Warren Buffett and the Tobin tax, for reasons of equity and solidarity.” And again: “Scandalous that in Italy you will hit the middle class” by ROBERTO MANIA
I am rich, I am ready to pay more taxes. For reasons of equity and solidarity. And especially for a real big fight tax evasion. In return I ask the state to reduce its scope of action and be more efficient. “He reasons that Luca di Montezemolo, 63 years, average annual income of around five million euros.
Rich. And powerful chairman of Ferrari, president of NTV (the private high-speed trains), former president of Confindustria and Fiat. For some time there, there, one step away from direct engagement in politics.
And ‘agree with the American financier Warren Buffett: those who have more should pay more. “But — he adds — with all due respect for Buffet, on my proposal for one-off tax on large estates, from five to ten million a year, I felt a deafening silence.”
Silent business associations, a silent alert to its ruling class short-term interests. Shut up politics. Yet it is also here, according to Montezemolo, who passes the “reconstruction of the country”, after the failure of the Second Republic, redefining the relationship between the state and citizens, between the taxes they pay and the services you receive.
A crucial step to find — he says — “ethics and values,” to speak again of “common good” and not just “interests”, however important. Well then, the Tobin tax because “you absolutely must put a stop to speculation and it is right that we do at European level”.
But Italy is the center, in this interview, the reasoning of Montezemolo. A country in crisis, not only economic; no leadership prisoner of his past. “Today — he says — there is a government that is self-described liberal, but all you can say except that this Liberal government has made choices. I heard a minister of Economy claim to have … I miss the IRI effort photographed reality. And I see an unbearable intrusion in the economy. Therefore we have increased the intertwining of politics and business. cronyism and profiteering. crooks and blackmail. public companies were born with their Boards to place only some politicians trumpet. In 2005 I was president of Confindustria and remember that the task of a province was not a high price to buy shares of highways, but to provide services to citizens. Now is investigating magistrates in Milan. They occupied the state and this is the Instead of a strong state. A strong state should focus on its core business: safety, health, education, justice. This is the perimeter of the state. For this we pay (those who pay) taxes. “
That the state-intrusive, bloated with debt, there is never enough. Never. “Over the past fifteen years we have touched on all the records. But the services are not improved. Are increased monopolies, was born what I call the neo-statism city. Where competition in local services? Is it in transport or waste collection? The truth is that money goes to food services, but the great chasm of public spending. “
Taxes and growing inequalities, which reduce real incomes. The Istat said tables and analysis of the Bank of Italy. And ‘Italy of the new century. The middle class — as in other parts of the world, the United States in the lead — has thinned even more. Although the savings have been drained. “The average Italian — Montezemolo says the rich — is depleted. He has paid all taxes including those which are represented by hidden inefficiencies. Now there is a crisis, yes of course. It ‘true that a maneuver is used on public accounts. We ask it in Europe. We must do it. But once you hit the usual suspects. Instead serve growth and solidarity, fairness and rigor. “
And here it becomes almost Montezemolo to a program of economic policy. Liberal alternative to the government. Reduce the scope of the state, privatizing everything it can, by selling the real estate is not needed, abolishing inefficient spending, deregulating and cutting “immediately and not father died” of political privileges.
“Then, only then, if you need a contribution from the citizens, we need to ask those who have more. Why is it outrageous that you ask the middle class, the backbone of our society, to those who pay all you have to pay. Hence my proposal on the sheet: a signal of solidarity right. But there’s more. There is that in this way can we begin to hit the big (say, the really big) evasion tax “.
Minister Sacconi argues that taxing the “Montezemolo” does not take a billion a year. “I have not done the calculations. But while we reduce the intrusiveness of the state and then go get the money where we are. How much? We’ll see. It is certain that Italy needs to recover a bit ‘of ethics, a bit’ of values. Need a signal and we’ll see how it will recover in terms of tax evasion. “