Thu, Jun 20, 2019 - Page 8 News List

Wealth tax on super-rich helpful to society

By Feng Chien-san 馮建三

The Taiwan Higher Education Union on June 3 released a report showing that the nation’s university tuition fees are not too low.

Based on purchasing power parity, tuition fees, not including living expenses, accounts for nearly 12 percent of the average annual household income. Although this is lower than those in the UK, the US, Japan, South Korea and Singapore, it ranks No. 14 among the world’s richest 100 countries according to GDP.

The Ministry of Education said a single index does not reflect the picture accurately, and a university president said government funding is too low due to insufficient tax revenue, and that teaching and research quality would suffer if tuition were lower.

Both responses make sense, but Minister of Education Pan Wen-chung (潘文忠) and the university president could have spoken up together. A statement from the pair would have been taken seriously. What should they have said? The answer lies in Hon Hai Precision Industry Co chairman Terry Gou’s (郭台銘) proposal of a “wealth tax” on the super-rich.

Gou in 2008 first mentioned the idea of how the super-rich can make a contribution. At the time, then-Taiwan Semiconductor Manufacturing Co chairman Morris Chang (張忠謀) suggested that the government impose a wealth tax on top-income earners, and Gou chimed in, saying he would donate 90 percent of his wealth to social welfare when he dies.

In 2012, he called on the government to impose a wealth tax. His repeated calls for such a tax have been widely reported as he makes a bid for the presidency.

When Kaohsiung Mayor Han Kuo-yu (韓國瑜) proposed reinstating the preferential 18 percent interest rate on the savings of military personnel, civil servants and public school teachers, Gou said Han’s proposal was an empty promise unless he raised taxes.

Gou is the only one among the presidential hopefuls to call for a wealth tax. It would be good if media outlets asked the other presidential candidates to express their opinion on the issue.

In the US, several presidential hopefuls for next year’s race have also proposed various tax reforms.

Among them, law professor-turned-US Senator Elizabeth Warren — who once called herself “a capitalist to my bones” — has attracted the most attention after announcing her presidential bid in February.

Warren has proposed a 2 percent annual tax on wealth of more than US$50 million, with an additional surcharge of 1 percent on wealth of more than US$1 billion.

A poll showed that about 61 percent of US voters support her proposal, while 20 percent oppose it. If the proposal is passed, the rich would contribute another US$2.75 trillion to US society in the next 10 years.

If Taiwan followed the US, and Gou followed Warren, such a wealth tax would generate about NT$240 billion (US$7.7 billion) per year. It could be used for scholarships, to lower tuition for higher education, or to improve the childcare system to relieve young parents of the pressure of raising kids, while increasing the younger generation’s willingness to have children.

It might be difficult to solve all the problems, but at least a wealth tax would be the right path to take.

After the union’s report, it was unnecessary for the education minister and university presidents to oppose it. They could have seized the chance to incorporate Gou’s call for a wealth tax in their call. This would be a better and more effective response to the report.

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