Speaking at a hustings for the Chinese Nationalist Party’s (KMT) presidential primary candidates, Hon Hai Group founder Terry Gou (郭台銘) pledged that, if elected, he would provide free childcare services for all children aged six and under. Instead of funding the policy from existing government budgets, Gou came up with three methods to finance the policy, one of which was a “wealth tax” on super-rich people.
Gou’s plan is to target the top 1,000 wealthiest people, who would each pay an additional tax of NT$100 million to NT$300 million (US$3.2 million to US$9.6 million) per year.
For example, the government could levy an annual tax of NT$300 million on the top 100 wealthiest people in Taiwan, NT$200 million on the next 400 and NT$100 million on the rest. By doing so, the wealth tax would, in theory, boost the government’s tax revenue by a total of NT$160 billion annually.
The problem is: How to define the top 1,000 wealthiest people — and is the plan feasible?
Many wealthy people in Taiwan and the US have expressed their willingness, through open letters or petitions, to pay a wealth tax to narrow the income gap between rich and poor people.
However, it is undeniable that some would be unwilling.
For instance, when former French president Francois Hollande launched a wealth tax in 2012, numerous wealthy people left France. Some of them even opened shell companies, which were nothing more than post office box numbers located in tax havens, such as the Cayman Islands, Samoa, Belize or the British Virgin Islands.
Furthermore, the super-rich are usually extremely adept at hiding their wealth, especially those in possession of laundered money. Therefore, using data from the National Taxation Bureau might be an unreliable way to calculate the amount of revenue that could be generated from Gou’s policy.
If the government were to impose a wealth tax on the top 1,000 wealthiest people with the highest net income before taxes in the order stated above, it would likely be extremely ineffectual, as they might not have the highest gross consolidated income.
This is because they do not have to pay tax on gains derived from securities transactions and can legally reduce their tax burden by making arrangements for bequests or real-estate transactions in advance. Furthermore, certain incomes are taxed separately, and charitable donations are tax deductible. The super-rich can afford to hire professional accountants to help them reduce their tax bills.
The difficulty successive governments have had in raising basic salary levels in Taiwan suggests that not every rich person is willing to shell out hundreds of millions every year to help the less well-off members of society raise their children.
Whoever wins the presidential election next year would be able to pass legislation to introduce a new wealth tax if they hold a majority in the legislature.
However, Article 7 of the Constitution states that “all citizens of the Republic of China, irrespective of sex, religion, race, class, or party affiliation, shall be equal before the law.”
An amendment to the law at a constitutional level would be difficult, requiring a proposal to be submitted by one-fourth of the legislature and any subsequent resolution to be passed by three-fourths of the legislators present at the vote, from a quorum of at least three-fourths of the total number of legislators.
Clearly, it would be difficult to institute a wealth tax, both in theory and in practice. Despite that, Gou’s policy — which is nothing more than a campaign trick — will likely be supported by voters.
Jeffery Lin is a health and safety consultant.
Translated by Eddy Chang
Late last month, Beijing introduced changes to school curricula in the Inner Mongolia Autonomous Region, requiring certain subjects to be taught in Mandarin rather than Mongolian. What is Chinese President Xi Jinping (習近平) seeking to gain from sending this message of pernicious intent? It is possible that he is attempting cultural genocide in Inner Mongolia, but does Xi also have the same plan for the democratic, independent nation of Mongolia? The controversy emerged with the announcement by the Inner Mongolia Education Bureau on Aug. 26 that first-grade elementary-school and junior-high students would in certain subjects start learning with Chinese-language textbooks, as
There are worrying signs that China is on the brink of a major food shortage, which might trigger a strategic contest over food security and push Chinese President Xi Jinping (習近平), already under intense pressure, toward drastic measures, potentially spelling trouble for Taiwan and the rest of the world. China has encountered a perfect storm of disasters this year. On top of disruption due to the COVID-19 pandemic, torrential rains have caused catastrophic flooding in the Yangtze River basin, China’s largest agricultural region. Floodwaters are estimated to have already destroyed the crops on 6 million hectares of farmland. The situation has been
In 1955, US general Benjamin Davis Jr, then-commander of the US’ 13th Air Force, drew a maritime demarcation line in the middle of the Taiwan Strait, known as the median line. Under pressure from the US, Taiwan and China entered into a tacit agreement not to cross the line. On July 9, 1999, then-president Lee Teng-hui (李登輝) described cross-strait relations as a “special state-to-state” relationship. In response, Beijing dispatched People’s Liberation Army (PLA) aircraft into the Taiwan Strait, crossing the median line for the first time since 1955. The PLA has begun to regularly traverse the line. On Sept. 18 and 19, it
Midday in Manhattan on Wednesday, September 16, was sunny and mild. Even with the pandemic’s “social distancing” it was a perfect day for “al fresco” dining with linen tablecloths and sidewalk potted palms outside one of New York City’s elegant restaurants. Two members of the press, outfitted with digital SLR cameras and voice recorders, were dispatched by The Associated Press to cover a rare outdoor diplomatic meeting on one of these New York streets. American diplomat Kelly Craft, Chief of the United States Mission to the United Nations, lunched in the open air with Taiwan’s ambassador-ranked representative in New York, James