The American jurist Oliver Wendell Holmes Jr famously said: "Taxes are the price we pay for a civilised society." In recent decades, among too many of the world's wealthiest, that common-sense sentiment has given way to a far less noble view of might, right and entitlement.
In some countries there are genuine oligarchies that govern economic and political affairs. Elsewhere there are classes of self-styled "job creators" who believe their wealth and financial acumen alone entitle them to special treatment under the law. Pointing out that no entrepreneur or mogul is an island of economic productivity too often elicits cries of "class warfare" from the right and the rich. But if we are to maintain and improve the institutions and ideas (public education and affordable healthcare among them) that underpin modern society and its aspirations, every individual, particularly the wealthy, has a civic responsibility to pay his or her fair share.
The latest poster child for the spoiled rich is the French actor Gerard Depardieu. One of the best-known French movie stars of his generation, Depardieu made headline news when he announced he was moving to Belgium to avoid France's new 75% tax on income over €1m. Socialist prime minister Jean-Marc Ayrault slammed the actor for abandoning his country to get a tax break, calling the move "shabby". Depardieu shot back: "I am leaving because you consider that success, creation, talent, anything different, must be punished."
In a surreal development, Russian President Vladimir Putin soon after personally gave Depardieu Russian citizenship. (Russia has a 13% flat income tax.):
And Depardieu isn't the only one headed for the door. Last year, applications from French citizens for Belgian citizenship doubled, and estate agents in London and New York City report increased interest from wealthy French buyers.
A recent study from the nonprofit Tax Justice Network estimates that the world's elite uses a complex international system of financial sleight of hand to conceal a staggering $21tn – that's trillion with a t – from tax authorities. To put that into perspective, that's about equal to the US and Japanese GDPs put together.
The bizarre notion that appropriately taxing high incomes is somehow "punishing" success is part of what drives right-wing movements and conservative parties, like the US Republican party, to such extremes (for example, fighting – and defeating – an effort by President Barack Obama in 2011 to end tax breaks for owners of corporate jets during a once in a generation recession). During the just-concluded (and completely unnecessary) "fiscal cliff" showdown, Republicans fought till the last minute to preserve their "no tax hikes on anybody" theology, even going so far as to reject a bill by their own leader, speaker of the House of Representatives John Boehner, because it would have marginally raised taxes on those making more than $1m a year. Republican lawmakers were finally forced to swallow a bill that allowed tax cuts to expire for those making more than $400,000, and some are now faced with enraged party activists who pledge to field even more intransigent candidates to challenge them in the next election.
This senseless outrage might be more understandable if the wealthy had been unfairly called upon to shoulder expansive, unrealistic programmes. But the reverse is true. Over the past few decades, the portion of the pie going to the folks with the most has grown exponentially. In the US, the UK and the rest of Europe, even globally, wealth has grown increasingly lopsided, with the already-rich taking a much greater share than ever before. In the US, the rich are paying a smaller percentage of their income in taxes than at any time since the 1920s (with the exception of 1988 to 1992). The top income tax rate was 92% through most of the 1950s and early 1960s. Now it's 35%.
(Thanks to Mother Jones for this chart and a few more great ones)
As they've gotten richer, many high earners have reverted to a pre-modern mind-set: increasingly isolating themselves from the rest of society, in gated communities and private schools, with private police, even private fire protection. And as the rich hire private services to replace public ones, as a group they become less willing to help fund public institutions the rest of society depends on.
There may be little hope that the folks protecting that $21tn with complicated accounting techniques and tax havens will voluntarily cough it up, but there are signs of a burgeoning renewal of shared civic responsibility. Billionaire American investor Warren Buffett has campaigned for higher taxes on the wealthy, noting that he pays a lower tax rate than his secretary. Buffett, Microsoft co-founder Bill Gates and other super-rich individuals have pledged to give away at least half their money to charity. Wealthy Europeans are also publicly saying they should be contributing more. In France, they're being forced to do so.
Public attitudes about income disparities and those who game the system to escape paying their fair share are shifting as well. (Let's not forget Occupy Wall Street that kick-started that conversation.) Returning taxes on the rich to sensible levels was a winning campaign issue for President Obama, and polls have shown broad public support for getting the rich to invest even more into the communities that enable their wealth. Added to that are popular, more aggressive policies about nailing individuals and corporations that illegally evade taxes.
The world is facing a number of big, new challenges. We need the infrastructure, systems and services to address them and make life better for people around the globe. In order to do that, everyone needs to do their fair share – especially those who have benefited most from the system.
Recently elected US Senator Elizabeth Warren said it best:
Read more: Growing income inequality isn't just immoral, it's bad for economic recovery and growth.
Sources: Wikipedia, BBC, Wall Street Journal, Radio France International, Der Speigel, New York Times, Guardian, ThinkProgress, Avaaz, Huffington Post, Daily Beast, Business Insider, Boston Globe, Bloomberg, IMF