A left-wing bloc made up of the Socialist, Communist, Green parties and the hard-left France Unbowed had proposed a minimum 2 per cent tax on wealth over €100 million (S$150 million), dubbed the “Zucman tax” after the French economist who devised it.
Mr Lecornu expressed his “profound disagreement” with the wealth-tax proposal, insisting there was no such thing as a “miracle tax”.
Yachts, private jets, luxury cars - there are a lot of products for which such a ‘luxury VAT’ could be an idea imo. Some European countries had that after WWII, but then abandoned it in the 1980s or so. I don’t have list of products for which it could apply, and no list is perfect, but it would be part of the solution imho.
Ok, if you limit it to yachts and private jets, I ould see it only hit the super rich, but then again, why not both? Why limit ourselves to one way of getting the wealthy contribute their share to society?
What is ‘fair’?
If the ‘wealthy’ consume more - and more luxury goods - they would automatically pay more taxes, and the administrative costs of consumption taxation are much lower than they are in an income tax regime.
A consumption tax would also reduce the headache of low economic growth, which limits the income tax of the state in the long term.
A consumption tax is also ‘fairer’ in that under an income tax regime, savers pay more tax than consumers. Suppose we have a consumer and a saver with the same annual earnings. In an income tax regime, the consumer (who spends the money right away) pays tax only once when income is earned. The saver, however, pays not only once when the income is earned but also later on the income on the saved earnings (interest rates, dividends). So those who save (and invest) pay more taxes than those who spend their money right away.
Taxation on income (and capital gains) are often justified with the fact that the wealthy save more than the poor, so it is only fair that they pay more taxes, many say. In addition, it is often said that more wealth goes hand in hand with more economic power and political influence. Although these arguments have some validity, they do not address the core task of taxation. And, more importantly, they ignore the fact that social and political equality must be addressed primarily by other means such as transparency in political decision making, open public discourse, direct democracy, and other instruments.
Instead of taxing income and capital gains we could, for example, apply the consumption principle to the taxation not of wealth but wealth transfer since giving assets to heirs is, in fact, some form of consumption. This would ease the various troubles associated with all forms of income taxes, and would help to create a ‘fairer’ society.
To define what is fair, we have to define what fair is. Is fair equality, or equity?
In my opinion it’s equity. So while you might say “if everybody pays 2%, that’s fair!” I’d argue that if you have 100.000€ you should pay a far smaller percentage in taxes, than somebody having 100.000.000€. Because we consider that the basic needs for everybody will be around the same amount, that means that if the poor pay the same percentage of taxes as the rich, they will have enough to cover the basic needs (in the best case), but their ability to afford luxury will be reduced.
At the same time, if you tax the poor 1% while taxing the rich 60%, the poor will have a far better life, while the rich will probably not even feel the difference, beside some numbers going down in a banking app.