Enough

How much is enough?

Canadian and American political and social leaders are debating the wisdom of taxing accumulated wealth. They see it as a means to raise the funds required to rebuild infrastructure and provide universal health care and quality education.  In my view, this debate is more than relevant – it speaks to two of the fundamental values that define governance and social responsibility

It is, however, a complicated issue.

If a person works hard, pays their taxes, saves and invests wisely, should a government have a right to take that hard earned wealth away? Regardless of how much wealth a person has, is it fair to penalize or, worse yet, disincentivize investment and savings?  

Similarly, if a person has the foresight, vision and ability to create a whole new industry out of nothing, should society be able to tax the founder’s accumulated wealth in the name of social justice? 

For example, Elon Musk has created new businesses that employ tens of thousands and have revolutionized sectors of our economy. His initiatives are blazing a trail towards energy sufficiency at a crucial time when fossil fuels threaten our very lives. Another example is Jeff Bezos who has redefined the 21st century retail industry and revolutionized global marketing and distribution.

Should these individuals be penalized for their creativity and success? 

Definitely not. 

Their contribution to progress and to the global economy is beyond dispute. 

Private sector leaders like Warren Buffet and Bill Gates have devised ways to fund major health, environmental, and educational projects by divesting themselves of their accumulated wealth.  

They do so by choice, and indeed they create more tax paying jobs and while they also profit from their actions as they invest in the companies that develop and supply products. They also pay taxes on their gains. They work together with governments and multilateral agencies to put their wealth at the service of humanity. 

They have not been forced to do so, they do it out of a sense of social responsibility. So do many others who serve as patrons for civil society organizations that help advance the ability of growing numbers to enjoy levels of health and education necessary to thrive in today’s technological economy.

I do not believe that taxing already taxed wealth is the answer. This would rob people of the incentive to save, invest and create – all elements that are at the base of a successful economy. This might also create two poles of society and foster frustration, envy and resentment. History has shown us that any society that builds on resentment or division ultimately fails. This has been the story of fascist and communist states and remains a fact of life in today’s populist societies.

“Tax wealth” is a wonderful, catchy slogan. Unfortunately, slogans rarely become good policy. It provides politicians with a facile sound bite while resolving nothing. 

Who is going to decide how much is enough? Are people going to stop producing because they have reached society’s threshold of how much is enough?

What is needed is for government to do its due diligence with regards to taxation and spending policies relevant to today’s society. Governments should create the framework for a livable minimum wage while providing essential medical, educational, and infrastructural support so that all can enjoy access to the rapid progress that we are seeing throughout the global economy? And they should set once and for all a fair and simple taxation system so that all pay their fair share and contribute to the well-being of society.  

At the same time, the broadening of corporate social responsibility must become a guiding light for the private sector to ensure social stability of their markets and to create societies with balance and vision.

Political leaders often gravitate towards easy decisions that do not solve structural problems but that instead kick decisions down the road.

Governments find billions and even trillions to wage war and fund questionable special interest projects whose ultimate value is doubtful. 

Yet they are generally incapable of adapting to create a modern, effective, fair yet simple tax system and spending plans that prioritize access to basic health, infrastructure, and education. 

So, it is not up to government to decide how much is “enough”. 

Instead, government must create institutions that ensure equal opportunity for all and to deliver basic services to all citizens. Some will always earn more than others. That is a fact of life that will never change. Governments need to find a better balance of revenue sources and collection thereof taking into account varying levels of income and consumption while finding a better balance between Industry and the individual.

Post the massive support spending of the pandemic, this is a conversation whose time has come.

As we transition into a post-Covid economy, as we deal with increased funding deficits in the context of increased needs, the time for change and dialogue is now. 

Are we up for it?

Edición: Laura Espejo