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Millionaire's Tax is the Best Debt Brake

by Sahra Wagenknecht Saturday, Apr. 14, 2012 at 11:00 AM
mbatko1@hotmail.com

Sahra Wagenknecht is a leader of the Left party, Die Linke, in the German Bundestag and author of "Freedom instead of Capitalism." Learning from other cultures is a strength, not a weakness. The University of British Columbia had a tuition freeze for 6 or 7 years and kept tuition at 00.

MILLIONAIRES’ TAX AS THE BEST DEBT BRAKE

Interview with Sahra Wagenknecht

[This interview published 3/19/2012 is translated from the German on the Internet, http://www.linksfraktion.de/interview-der-woche/millionaerssteuer-beste-schuldenbremse/.

Sahra Wagenknecht is a leader of the Left party, Die Linke, in the German Bundestag. A tax on millionaires is the demand of justice, not of envy and can help master the debt crisis.]

Once again the Die Linke party in the Bundestag urges a millionaires’ tax. Why does Germany need a millionaires’ tax?

Sahra Wagenknecht: In Germany, 830,000 millionaires have assets of 2.2 trillion euro. This is more than the German Federal Government, territories and local governments have in debts. While real wages fell for years and social benefits were cut, the assets of the richest one percent of the population rose even in the crisis. On average, millionaires in Germany could increase their assets eight percent a year since 2003 and billionaires even ten percent. This redistribution from bottom to top must be ended because this distribution policy fuels speculation and leads to crises which ten burden public budgets, not only for reasons of justice.

Opponents of a millionaires’ tax like to speak of an envy tax. Why is a millionaires’ tax just?

The crass inequality of assets cannot be justified by anything. The richest tenth of the German population possesses at least two-thirds of the total assets while the share of the lowest 70 percent in total assets has fallen to less than ten percent. Here is another example: the corporate head of VW pocketed 17.5 million Euros in 2011 which was almost a thousand times as much as a subcontracted worker at the same firm. This has nothing to do with differences in performance. Rather most millionaires do not have to work for their assets. They simply inherit them. Die Linke is convinced they should at least pay regular taxes. A millionaire should not pay a smaller percentage of taxes than his cleaning lady.

The millionaires’ tax is also up for debate4 internationally on account of the banking crisis. The American president Barack Obama demands it along with the French socialist Francois Hollande. The rich in the US should pay at least 30 percent in taxes. If Hollande succeeds, the top tax rate in France should amount to 70 percent. How high should the millionaires’ tax be in Germany?

Germany ranks at the low end in the international comparison in property- and inheritance taxation. We want to change this. In our legislation, up for discussion in the German Bundestag this week, we urge reintroduction of the property tax as a millionaires’ tax – with a tax rate of 5 percent. This alone would pour at least 80 billion euro into the public treasury. In addition we urge up to 75% income tax on income millionaires earn. The French presidential candidate of the socialists, Francois Hollande, also supports such wealth tax.

Why is a millionaires’ tax better than a debt brake in times of crisis?

The consequences of the crisis have intensely burdened the public budgets. According to Euro stat, public debts in Germany catapulted almost a third between 2007 and 2010 to 2.1 trillion Euros. This refers back first of all to the bailout packages for the banks. The3 money pulverized for the bank bailout should now be collected through cuts to employees, pensioners and the unemployed. This is unjust and economically harmful. Public budgets can only grow out of debts; they cannot save out of debts. The spending cuts forced all over Europe make this impossible since they strangle the economy and lead to more unemployment, poverty and an ever greater debt burden. We want to lower the debt burden by calling those to pay who profited from the financial casino and countless tax gifts and contributed to the crisis through their conduct.

How should the additional revenue be used?

With the revenue from the millionaires’ tax, the domestic market could be strengthened and jobs created. Social benefits should be raised and the enormous investment backlog dismantled. State indebtedness can only be reduced when the rich and super-rich pay. The millionaires’ tax is the best tax brake.

In 1996 an increase in the property tax in Germany was last enacted after the German Constitutional Court declared this tax unlawful in 1995. Does the same fate threaten a millionaires’ tax?

The German basic law does not stand in the way of a property tax. The German Constitutional Court declared the manner of its increase unlawful since real estate was favored in the tax law. The property tax itself was not declared illegal. Nothing will stand in the way of a property tax when this error is corrected.

POLITICIANS AS LOBBYISTS. TAKE AWAY THE TROUGH!

By Norbert Meyer

[This article published 3/15.2011 in the Austrian Die Presse is translated from the German on the Internet, http://diepresse.com.]

In their books Jeffrey Sachs and Joseph E. Stiglitz recommend effectively fighting corruption. They urge rules against fraud and international actions against banking secrecy.

In his new work “The Price of Civilization. Economics and Ethics after the Fall” (2011), the economist Jeffrey Sachs identifies “seven necessities for effective governing.” One of the most important is ending “corporatocracy,” the hegemony of mammoth corporations over Washington. The system of election campaign financing, lobbying and the revolving doors between politics and the economy have long not functioned.

The word creation “corporatocracy” used in 2004 by John Perkins in “Confessions of an Economic Hit Man” is negative. It describes the corruption of corporations and politics. Jeffrey Sachs’ following point could also describe the relation of Austrian parties and businesses to the state. Lobby firms must be prohibited from allocating campaign funds since they are a “cancer for the political process.” Therefore persons with high posts in the government should not be able to work for or as lobbyists after leaving government service, recommends the professor who teaches at Columbia University in New York.

THE MOST GRIEVOUS CORRUPTION IN ELECTION CAMPAIGNS

Lobbyist jobs should be prohibited for those politicians and officials who previously were directly occupied with those firms in their service time. “Take away the trough,” Jeffrey Sachs urges. Gigantic corporations see financing elections as investments to bring about tax breaks for the rich, deregulation or government contracts. Direct counter-measures must prevent them from buying politicians through contributions.

In “Making Globalization Work,” (Norton, 2006) the former chief economist of the World Bank, Joseph E. Stiglitz recommends a simple prescription against corruption. It is directed above all against multinationals. “The international community should quickly devise rules against banking secrecy and expand to areas that are not only limited to terrorism. The G8 could leap in the gap by simply prohibiting any of their banks from doing business with those institutes and submitting to other rules than their own.”

In the struggle against terror, the US showed that collective actions work. They efficiently prevented banks financing terror. The same resolution should be applied against corruption, weapons trade, drugs and tax evasion,” Stiglitz says. For him, the loopholes of tax havens are not an accident. The possibility6 of offshore banks exists because it is in the interest of certain groups in highly developed countries. Corruption plays a great role in the election battles of industrial nations. The contributions of big businesses occurred on a greater scale than the bribery of officials. In any case, corruption has a disintegrating effect on the economy and must be stopped both in its supply and in its demand.

SPECULATING MADE EASY

Regulation of Shadow Banks. Shadow Banks are a Great Danger

By Ulrike Herrmann

[This article published in: Die Tagesanzeiger, March 2012 is translated from the German on the Internet.]

The word “shadow banks” is revealing. In great conciseness, it describes a very strange phenomenon. These are banks that officially are not banks and therefore are unregulated and can operate in the shadows on the financial markets. Hedge funds, private equity funds, money-market funds, derivative traders and conduits of all kinds are part of this novel structure.

These shadow banks are extremely dangerous because they all utilize the same trick for maximizing their profit. They “leverage” by taking credits. Thus they speculate with foreign money.

Banks have also long discovered the charm of shadow banks. Normal banks are subject to a very fine-meshed control. Evading this regulation and funcing their own conduits is obvious. These “offshore businesses” proved fatal in the last financial crisis.

It has also dawned on politics that regulating the financial markets is impossible when 30 percent of the sales occur in unregulated shadow banks. Since the last financial crisis, the mantra is “every place, every product and every actor“must be controlled. However nothing has been done and the latest advance of the EU commission may also be unsuccessful. The commission did not expect the British government to allow the financial center London to forfeit its lucrative business with the shadow banks.

There is no EU-wide regulation of the shadow banks. There is only the single-handed effort. Germany could prohibit all German banks from conducting business with shadow banks. The damage may be kept under control. In the past, no one could prove that shadow banks are indispensable. They are only indispensable for the profit model of Deutsche Bank.

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