Taxing the ultra-rich

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By RENATO JANINE RIBEIRO*

The shameless defense of the privileges of the ultra-rich was an article in Folha de S. Paul from Sunday, September 3

The sudden revelation, just a few weeks ago, that the ultra-rich have access to exclusive investment funds, one per individual or family, that do not pay taxes, was surprising. Neither I nor the overwhelming majority of informed Brazilians had heard of this privilege.

But the reaction of the very rich to the proposal to subject these applications, and their owners, to the same taxation to which all Brazilians are subject was no surprise to me. I was already expecting that. The defense of privileges is a very strong tradition in Brazil. In fact, most of our country does not prosper precisely because of this.

I remember, during the dictatorship, a Minister of Finance saying that it was important for the richest to enjoy luxury, because that would attract the poorest to seek to enrich themselves, which in turn would trigger the economy. I also remember that Western Europe prospered precisely because it adopted a different line: it instituted the Social Welfare State, mitigating social inequality through public policies that give everyone access to decent education, health and transportation. Everything indicates that a fairer distribution of income is more successful for economic development than its excessive concentration.

An example of this shameless defense of the privileges of the ultra-rich was an article in Folha de S. Paul on Sunday, September 3rd. In the prime space on the third page, a man compared the taxation of fund income with the tax on large fortunes, which in some countries led to the evasion of large sums. But the trick was to compare what has nothing to do. By definition, a wealth tax will only fall on the very rich. This is not what is in the Government's project. What he proposes is almost the opposite: that the very rich also pay what we all pay. An elementary measure of fiscal justice and, more than that, of elementary justice.

The article is curious, because it begins with practical arguments, arguing that the tax (which is presented as being what it is not) would bring effects opposite to those desired. But then proceeds to an unlimited praise of the good that the very rich do for society. OK, here it may be a matter of opinions. Capitalism is an economic system that works from capital, which is different from the mere accumulation of money because it is put into production. At best, producing goods and services. In rentism, producing money thanks to exaggerated interest rates that Brazil pays. But let's put that aside.

Because the basic question remains: why don't the ultra-wealthy, if they are so admirable, pay taxes? A tax, I repeat, that all other investors, even in modest sums, pay. Why this privilege? Remembering that etymologically privilege is a private law, a law for private and not public benefit – almost a contradiction in terms.

Finally, the case reminds me of the condition of the nobility in France under the Ancien Régime. The nobles, who would be 4% of the population, were exempt from taxation. They were also the richest, with vast lands. Throughout the XNUMXth and XNUMXth centuries, this meant that as a bourgeois, tax-paying class grew, what it wanted most was to become noble.

Rising to the nobility would mean stopping paying taxes, having a status high social status and approach the royal court. By the way, this was an important factor for the backwardness of France in relation to England. In this country, not by chance the cradle of the Industrial Revolution, nobles paid taxes and could do business. The English nobility invested in the economy, while the French did little else but squander. All this resulted in two almost opposite revolutions, the French and, in England, the Industrial. So, exempting the richest elite from taxes does not mean that it provides development.

*Renato Janine Ribeiro is a retired full professor of philosophy at USP. Author, among other books, of Machiavelli, democracy and Brazil (Freedom Station). https://amzn.to/3L9TFiK


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