“I don’t like the rich” the new French President said verbatim. The planned introduction of a 75% income tax for personal incomes of a million euros or more reflects this antipathy, and it is a sentiment that Hollande shares with many other politicians. The French income tax is supplemented by a net worth tax, a so-called habitation tax, a property ownership tax and several other levies. Pondering Hollande’s fiscal policy, I recalled “The Ten Cannots” attributed to Abraham Lincoln, the 16th President of the United States (1861-1865). The lines read as if they had been phrased yesterday, and not 150 years ago, and here are some of them:
“You cannot strengthen the weak by weakening the strong.
You cannot help the wage earner by pulling down the wage payer.
You cannot further the brotherhood of man by inciting class hatred.
You cannot help the poor by destroying the rich.
You cannot keep out of trouble by spending more than you earn.
You cannot build character and courage by taking away man’s initiative and independence.
You cannot help men permanently by doing for them what they could and should do for themselves.”
The politics of envy have gathered steam in Germany, too. Executives of DAX-listed companies are targeted because of the multi-million-euro incomes they earn. Politicians of nearly every party are vociferously demanding that “those with higher incomes should come around and contribute.” It is a sinister thing to say. Not least because it wilfully ignores the fact that this has been the case for a long time. As it is, the top
5% of Germany’s income earners paid 41.8% of the income tax total collected,
10% of Germany’s income earners paid 54.4% of the income tax total collected,
15% of Germany’s income earners paid 64.3% of the income tax total collected,
whereas 50% of the country’s income earners contribute only 6.2% to the income tax revenues, which is negligible.
The contemplated top tax bracket will affect somewhere between 7000 and 20,000 individuals in France. The equivalent income bracket in Germany is similarly limited to a group of less than 10,000. This is why serious opposition to this “rich hunt” is not to be expected because it affects only a minuscule minority, or so the politicians pursuing it seem to think.
A tax hike like the one planned by Hollande, which would leave just 15% of very high incomes to those who earned them, is tantamount to expropriation. It may well be that the plans will not be implemented as harshly as intended. But at issue is hardly whether you take 85% or perhaps “only” a merciful 65% out of millionaire incomes at the end of the day. Rather, the mentality underlying such demands is at issue: “The rich” are a minority in society that have virtually no public lobby.
If politicians debunked any other minority with equal vindictiveness in a talk show, it could cause quite an uproar, and justifiably so. Just take a moment to imagine a well-known politician publicly announcing “I don’t like this-or-that minority” the way Hollande did in regard to “the rich.” It is simply inconceivable, unless the minority at hand happens to be “the rich.” In this case, anyone may vent their clichés with impunity.
The thing is, our society needs “the rich,” because as often as not they are the entrepreneurs who contribute the equity necessary for investments, who create new jobs, and who enter into considerable risk in the process. In return for these commitments, they not only deserve a substantially higher income than those who run less of a risk and who create no jobs, but also merit societal recognition and respect.