What syndrome is this?
The peculiar affliction among millionaires around the world that has seen them practically begging their governments to tax them more.
Really, are there such millionaires?
You bet. Earlier this week, nearly 100 of the world’s richest people issued a statement directed at their governments, in which the operative phrase was: “Tax us. Tax us. Tax us.” They wanted governments to “raise taxes on people like us. Immediately. Substantially. Permanently.”
Whoa, why are they begging to be taxed more?
Their argument — and there is much merit in it — is that the Covid-19 pandemic has devastated economies around the world, and has left governments resource-constrained. And since millionaires are not frontline workers — they are not taking care of the sick or driving the ambulances or restocking grocery store shelves or delivering food — they ought to contribute in other ways, they reason.
Doesn’t it? So, as the signatories to the ‘Millionaires for Humanity’ statement note, where they can help out is in terms of resources. “We do have money, lots of it. Money that is desperately needed now and will continue to be needed in the years ahead, as our world recovers from this crisis,” they observe. And since the coronavirus crisis and the economic aftermath could “push half a billion more people into poverty”, governments should take these moneyed people up on their offer.
Who exactly are these model millionaires?
The signatories include Ben and Jerry’s ice cream co-founder Jerry Greenfield, Disney scion Abigail Disney, British director Richard Curtis, Irish venture capitalist John O’Farrell, and many others. They banded together under the umbrella of groups called the Patriotic Millionaires, Human Act, Tax Justice UK, Club of Rome, Resource Justice, besides Oxfam.
But no Indian millionaires on the list, I take it?
Why do you think that is?
Well, typically the moneyed class anywhere would argue — and India millionaires would, too — that their philanthropic activities do more societal good than any government could. And, of course, the classic libertarian argument extends so far as to say that all taxation is “theft”.
Isn’t that extreme?
You’d think. Libertarian writer Ayn Rand’s 1957 novel Atlas Shrugged channelled that philosophical argument passionately. The ‘Atlas’ in the book represented the “prime movers” — the few who bear the burden of the global economy — who “go on strike” to protest the “excessive regulation and taxation”, and leave the world in disarray.
In 1957, the top marginal federal income tax rate in the US was 91 per cent, far higher than it is today.
India, too, had similar tax rates, didn’t it?
In 1974-75, the peak tax rate was 97.75 per cent. In other words, the government appropriated virtually all of a moneyed person’s earnings beyond a threshold. But there’s a difference between India and the US.
What was that?
In the US, periods of high marginal rates of taxation coincided with periods of high productive growth in the economy. Progressive taxation worked. In India, however, such high rates of taxation, which gave little incentive to earn beyond a threshold, only spawned a humongous black economy, which has never truly been exorcised since then.
If governments are able to persuasively establish that tax revenues are being put to good use, it would be difficult to argue — as millionaires, including in India, do — that their philanthropy is a better channel for societal good than progressive taxation is.
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