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February 25, 2020

Just pay tax?

Philanthropy provokes some interesting reactions. If someone has enormous wealth and they choose to give it away,  it seems churlish to question their motives. But at a time when democracy worldwide is at its lowest ebb on record (Democracy Report 2020) and when this coincides with global wealth becoming concentrated within an ever smaller group of individuals, perhaps that is exactly what we should be doing. Simon Jenkins in the Guardian takes no prisoners with his call to the super-rich Just pay your taxes and let fairly-elected governments decide how the country’s wealth should be spent for the common good.


Simon Jenkins, The Guardian

So who do you want for president, this “arrogant billionaire” or the other one? You don’t have to be rich to win US elections, but it helps. Michael Bloomberg’s assault on the Democratic party may be an extreme case of wealth attempting to buy power, but, as he implied on Wednesday, if it takes a person of extreme wealth to be rid of Donald Trump, so be it.

At least Bloomberg is running for election. Consider the other now fashionable route to global leadership. Jeff Bezos this week offered to save not just America but “the Earth”, with $10bn of his personal fortune. He followed Bill Gates, who is devoting billions to cure global disease, and Mark Zuckerberg, who in 2015 pledged to put 99% of his winnings into “advancing human potential and reducing inequality”.

We have a small group of people seeking absolution for their sins. As they take to the hills, they throw gold from their wagons

A cynical response might note the odium now attaching to the top 1% of wealthiest people. Greed may once have been good. Apple under Steve Jobs gave almost nothing to charity, arguing that charity was what his shareholders could do with their dividends. These gilded ones thought of themselves as “anywheres” in a fragmenting world. They inhabited an artificial land of tax havens, offshore offices and flags of convenience. Presidents danced to their wills. They bought monopoly protection from entire legislatures. They chanted with the notorious New York tycoon Leona Helmsley: “Only the little people pay taxes.”

But as the profits piled ever higher, they began to stink. After you have spent all you can on yourself and your loved ones, humanity beats a moral path to your door. You cannot just shrug and hire another accountant. Besides, over the horizon come the thundering hooves of radical economists such as Thomas Piketty and Robert Reich, rallying politicians to the cause of the other 99%. No one is happy with ever fewer people owning ever more than the rest. Gradually the 1% realised that they were beneficiaries of a giant ripoff.

So we now have a small group of people seeking absolution for their sins. As they take to the hills, they throw gold from their wagons. You want a cure for malaria, a fix for homelessness, an owner for the Washington Post or a saviour for the planet? Just say the word and “my man will see to it”. But there is a bargain to be struck. Don’t kill the goose that lays the golden eggs: let’s hear no more about regulations; forget taxes – they’re what governments waste.

This is the political economy of the middle ages. Then it was the Roman Catholic church and its bishops who were the magnates, claiming sovereignty over states and rulers. To the church went rents, tithes, bribes and fees. From the church came patronage and welfare. It provided jobs, hospitals, schools, hospices, alms and absolutions. It controlled monarchs and principalities. Who needed a state when a munificent church was to hand?

This delegation of social order to one group in society degenerated into conflict. It saw its final nemesis in the thirty years’ war, the most horrific contest Europe experienced before the 20th century. A similar reliance on private charity to meet public welfare was replicated during the industrial revolution, from Robert Owen and Titus Salt to the Carnegies and Rockefellers. It too led to antithesis – to socialism and corporate statism.

The plea of the one percenters has a superficial plausibility. If global corporations can handle budgets bigger than half the states in the United Nations, what is the problem? Surely charity is good, whatever its source. If the source is indeed fiscal theft, at least it is shortcutting the state. Government treasuries should be able to tolerate a few pluralistic distributors of a nation’s surplus wealth. If conventional politics cannot cure diseases, reduce global heating or save newspapers, why not let capitalism try – tax deductible of course.

All history is a pendulum. We are now seeing the 20th century’s social democratic consensus running out of steam. Populists and authoritarians are in the ascendant. Liberalism, as traditionally understood, is in retreat. Conservativism too must re-examine itself through emphasising the local and the communal, not in glorifying the extreme capitalism of the digital age, however atoned by charity.

The status of such charity on this inflated scale is undefined. It is offering, in effect, to relieve governments of their responsibilities of welfare, protection and care, both at home and abroad. Yet charities are notoriously wasteful and inefficient, relying on their perceived goodness to avoid supervision. They are as wildcat as the capitalist enterprises now so eager to sponsor them. Yet they are to be the recipient of billions.

That is why I find uncomfortable the idea of a hoard of surplus cash – secured by dodging taxation, regulation and monopoly control – becoming the private exchequer of a tiny group of very rich to distribute at whim. This is not a matter of politics, but of constitutional propriety. In a democracy, the distribution of spare resources should be for elected governments. At least, in some respects, Bloomberg is honouring this principle: he is seeking election (if he can navigate troublesome Democratic debates and primaries), rather than absolution for expropriation.

Taxes should be raised from all for the good of all, to be allocated through democratic consent. That is how decent societies operate, not by vaguely thinking about what feels good from the comfort of a Californian beach or a yacht moored in Monaco.