Plutocrats, taxes & moral decay

Sixteen of France's richest people have sparked a lively debate by offering to pay higher taxes. They did this in a joint letter titled “Taxez Nous!” (“Tax Us!”), published in the daily Le Nouvel Observateur on August 23. Among them are the heads of some of the country's largest corporations, including Liliane Bettencourt, Europe's richest woman. The signatories commend the French and the wider European environments, from which they say they have benefited and which they wish to preserve against threats such as capital flight and increased tax evasion. They also contend that by paying more tax they will help reduce the French budget deficit, which President Nicolas Sarkozy plans to bring down from 4.6 per cent this year to 3 per cent in 2013. France has, in fact, just announced a 3 per cent rise in income tax for all who earn over €1 million a year but the signatories say they are also responding to the government's call for solidarity.

The letter appeared shortly after a joint proposal by German Chancellor Angela Merkel and Mr. Sarkozy for a financial transactions tax to help the eurozone economies — and after the multibillionaire Warren Buffett's New York Times article (August 14, 2011) calling for higher taxes on the “mollycoddled” super-rich so that they bear a share of the sacrifices others are making and also contribute to deficit reduction.

French trade unionists point out that merely reducing budget deficits will not encourage more economic activity. One of the letter's signatories calls the French plutocrats' idea “weak and insufficient”; and Mr. Buffett has been criticised for talking only about tax on his income, which forms a tiny part of his overall wealth of about $60 billion. Above all, neither the French super-rich nor Mr. Buffett and his critics analyse the reasons for the current economic crises. That critique is now coming from various British Conservatives who conclude that the so-called free market is a “corporatist racket for the few”; it is free only for the very rich, who can move their money around at will.

In addition, the “feral rich” — bankers, business tycoons who exploit lax regulation and offshore tax havens, and expense-fiddling politicians — are all part of a wider problem, which the commentator Peter Oborne calls moral decay. The debate is significant and will continue but notable absentees from it are the centre-left parties that have in the past revived economies and ensured a decent life for hundreds of millions by protecting them from the worst effects of unrestrained markets. They must enter the fray if they are to stay relevant.

Le Nouvel Observateur