Case for progressive taxation:

The ultra rich businessmen benefit a lot from the:

·       Scientific and technological advances of the past, research output from universities etc.

·       Communication and transport infrastructure built over centuries

·       Safety provided by the government for their immense wealth

·       Access to cheap natural resources

·       A ready supply of highly skilled manpower often provided by subsidized education.

·       Global supply chains supported by trade agreements

·       Well-developed Financial markets for funding 

And so, the ultra-rich need to contribute taxes commensurate with their use of the enabling economic infrastructure and the security that is provided for their immense wealth.

The multiplier effect:

An example of the effect of enabling economic infrastructure: 

About 200 yrs ago, a great singer needed to travel to towns, sing in front of small crowds and make a small amount money. 

The same singer, after tech advances like microphones and speakers and recorders and streaming services, could make a million dollars now. 

It is the multiplier effect of the global markets and the enabling infrastructure that allows for such quick wealth accretion and cannot be attributed to a manifold increase in the singer’s talent. 

Security for wealth 

A few hundred years ago, wealthy nobles had to pay for securing their wealth by maintaining a lot of  farm workers and a private army against competing forces.

Now billions of dollars can sit in the stock market and earn millions of dollars, without any effort or worrying about security. 

In fact, the huge military expenditures of several rich countries mainly help to protect the global wealth of the ultra-rich, and they need to pay a large share for the military and the law and order. 

Fair share of benefits:

The entrepreneurs are of course great innovators and risk takers, putting together various technologies and resources in clever ways to cater to market needs and even creating a new market. They create shareholder value, and they create jobs. They deserve to benefit economically for their efforts and risks taken.

However, they do not pay a fair share of taxes and use their political influence and pay much less taxes, thereby increasing the inequalities in the society.

The ideal society is where anyone can be rich, but no one should be poor.

Myth - Taxing the rich will affect job creation

There is a case made by rich people that they are required to create jobs.

Sure, but not always.

If we take the example of Zuckerberg, he became a billionaire starting from scratch, building up a tech platform and creating jobs. But after he became a billionaire, there were no more innovations. He just spent billions acquiring WhatsApp, Instagram etc, and creating a monopoly. He also acquired 80 or so companies, only to close off competition, absorb talent or absorb ideas and innovations. So much for billionaires creating jobs. It is actually some of the marvellous start-ups that bring innovative solutions and create jobs.

The struggle:

So, the struggle is not between capitalism vs socialism. It is between welfare capitalism vs vulture capitalism.

It is about having a fair graded taxation for the benefit of everybody.

It is about having a vibrant market economy and not monopolies.

it is also about having subsidized education, health care for the poorer section of the society.

When everyone progresses, the nation also is stronger. A nation cannot progress if a large section of the people is under nourished, illiterate and/or unhealthy.

Say yes to progressive taxation and welfare capitalism !