Forcing the rich to pay their share is possible, but it will never happen while there is such a failure of political will
Owe them £1,000 and you're at their mercy, but owe them a million and the position is reversed. Keynes's quip about bank managers applies equally to the taxman. If you doubt the power of plutocrats to call the tune to which the Revenue must dance, then just glance at the deal the UK has struck with the Swiss. A regular punter who tried to make his tax payments conditional on a guarantee of anonymity from officialdom and a reduced tax rate wouldn't get far. But where the punter in question has serious cash in some Alpine hideaway, then HMRC is suddenly reduced to a humble supplicant, and so it has now made concessions of precisely this sort in relation to Swiss banks.
Galling as the special treatment is for UK citizens who dutifully file tax returns and keep their dough onshore, the hoped-for £5bn from the concordat is not to be sniffed at in these times. The trickle of riches from Zurich should marginally reduce the quotient of misery being meted out on the rest of the country, and the emergence of cracks in the old Swiss wall of separation is, of course, for the good. But it is far from good enough. The striking of such bilateral deals retards hopes of a comprehensive transnational arrangement for exchanging information and revenues across borders. And unless the avoidance problem is grasped globally, fixing leaks in one tax haven will only tend to increase the footloose flow to others.
Multilateral action is never easy to orchestrate, but it really ought to be possible here, when there is such an overpowering cross-country interest involved. It is not merely London, but Berlin, Paris and Tokyo that fret about seeping coffers. President Obama bemoans the great clusters of companies registered in the Caymans as "the biggest tax scam on record". And tax havens ought to be easy enough to bring to heel: they survive only thanks to the defence and other protections extended by real states, a point underlined by the crown dependency status of the Channel Islands. What frustrates global action is not, then, some great practical obstacle. Rather, it is an almost ideological fear of taking on the rich.
Ever since the days of Reagan and Thatcher, the reigning conventional wisdom has confused the possession of wealth with its creation, fuzzy thinking which has advantaged the well-heeled because it implies that taxes on them are a tariff on general prosperity. After the great bust of 2008, however, even establishment figures began to observe that some of the biggest fortunes were earned through activities which were – at best – useless to the wider economy. During Washington's great summer deficit showdown, Warren Buffett explained that Congress would never restore fiscal rectitude while protecting his own billionaire class as if they were endangered spotted owls. Now French heiresses and executives have stepped forward, too, to explain that they could take more of the burden. Hearteningly, the centre-right government in Paris this week agreed, setting out an "exceptional contribution" for the richest, to apply until happier days arrive.
In London, sadly, such suggestions are still way too taxing for the coalition. Little is nowadays heard of its one-time claim to be "progressive", a line that steadily became impossible to sustain. The only serious extra charge being made on the rich comes from changes to pension tax, which George Osborne tweaked after inheriting from Alistair Darling. What is worse is the ceaseless chancellorial briefing that the new 50p top rate will soon be axed. This chatter continues despite it being too early for there to be any evidence to support Mr Osborne's prejudice that the supertax discourages effort to such an extent that it is failing to raise any money – and indeed, despite emergent suggestive evidence that it is paying real dividends. Forcing the rich to pay their share is perfectly possible, but it will never happen while there is such an egregious failure of political will.
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Source: http://www.guardian.co.uk/commentisfree/2011/aug/25/tax-rich-switzerland
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