Tuesday, August 30, 2011

More wealthy Europeans want higher taxes for the rich

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Liliane Bettencourt
Liliane Bettencourt

Like the French before them, a number of other European entities are now considering sensible measures economic self-flagellation:

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.


"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."


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".


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."


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.

Of course, valiant U.S. plutocrats are having none of it:

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."

There, Americans, aren’t you just happy and relieved to know that you, at least, have actual protectors of you and your country’s wealth who aren’t about to be swayed by inane appeals to compassion for poor people and other lower-level riffraff?

(via @ebertchicago)