Impose competition not tax
Should the rich pay more tax? Warren Buffett appears to think so. Last week he wrote a piece in The New York Times about how he and his super-rich friends pay far too little tax.
But it turns out that he isn’t the only turkey voting for Christmas. Now the French super-elite are at it too: 16 CEOs have just put out a call to be charged more. The idea that the rich don’t pay enough tax and should pay more has been gaining ground in the last few years – note our own new 50% top rate and the constant chatter in the press about a mansion tax.
But while the views of Buffett and the CEOs are being interpreted by some as a call for higher income tax, that’s not what they are. The CEOs are suggesting they pay a one off “special” tax to help France through tricky times. You could call that generous, or you could call it an effort to head off talk of something worse: a higher wealth tax. Buffett’s gripe is more about the way in which the rich can avoid paying income tax than the level it is levied at. He can take all his income as capital gains or carried interest and so incur a much lower tax rate than the mortals for whom income is income. We have a similar system here. If you’re smart you just arrange matters so that you pay your tax on gains and carried interest, not income.
• Read the full editor’s letter here: Impose competition not tax.