Sun, Dec 28, 2003 - Page 8 News List

Inheritance taxes are an antidote to capitalism

By Wu Ting-feng 吳挺鋒

The recent death of Inventec Corp vice president Wen Sayling (溫世仁) has triggered some discussion about the Inventec shares that Wen held, which are worth NT$3 billion.

Wen had not done any inheritance planning so an inheritance tax at the highest rate of 50 percent may be levied on his Inventec shares. It is probably safe to say that NT$1.5 billion of his assets will go into the government's coffers.

Wen's case is exceptional among the wealthy. Rich people usually employ sophisticated and professional devices to avoid inheritance taxes. They buy expensive life insurance, purchase land reserved for public infrastructure at low prices, set up foundations under their own or their companies' names or pass their wealth to their children bit by bit before they die.

The failure of the inheritance tax to function as it is intended to indirectly proves how strong a force concentration of wealth is. The phenomenon in which generation after generation of rich people are born with a silver spoon in their mouths rather than with a pair of hard-working hands indicates the bankruptcy of the assumptions of liberal economics about social mobility under capitalism.

The rich, despite the advantages they have, do not want to pay taxes. Chi Mei Optoelectronics Corp chairman Hsu Wen-lung (許文龍) and Fubon Group chairman Tsai Wan-tsai (蔡萬才) have advocated the abolition or lowering of inheritance tax rates to spur the economy. Quanta Group chairman Barry Lam (林百里) said that he felt sorry that Wen had to pay a high inheritance tax.

Lam also said that he would promote legislation allowing assets left by rich people to be used for public welfare.

Obviously, all of these individuals think that their accumulated wealth is strictly their own property and has nothing to do with society. That is why even though funds collected through inheritance taxes are intended for the public good, these people believe that it should be up to them to decide on the use and distribution of these funds instead of letting the assets be reallocated as the government sees fit.

The problem is that even when the rich do not use their wealth for their own purposes but for a good cause instead, the results are debatable. Rich people who devote their resources to foundations in the name of public welfare do not make public the reasons for their choice of foundations or the amounts of their funding. Also, the process of choosing a "good cause" is personal and arbitrary. As a result, the actions of wealthy people who contribute to foundations sometimes hurts rather than helps public welfare.

The trend of rich avoiding taxes and yet claiming to be keen on public welfare represents a reactionary force in history. It is similar to the sort of charity that existed in 18th-century capitalist society. At that barbaric time, the rich dressed in furs and made big money while workers starved to death in the streets. Abusers ironically became benefactors.

Public welfare is popular among the rich only when there is injustice in the system.

Bill Gates, the world's richest man and No. 1 philanthropist, is a good example of this. As a global monopoly, Microsoft benefits greatly from current economics. How could Gates engage in charity if his capitalist monopoly had not resulted in social poverty?

No wonder people throw pies at him.

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