The Dark Shadow Shrine

embrace the darkness; that you may see the light nestled within it......

Thursday, March 07, 2013

Robin Hood Syndrome -- taxing the rich to give to the poor

Sample qn: How far would you agree that the only divide worth addressing is the rich-poor divide? (VJC Prelims 2010)

For those whom I have covered the 4 Approaches on how to tackle questions restricting to a criterion X, the article below can come in handy for Approach 2.
For Approach 2, you want to dispute the assumption, i.e. argue that the rich-poor divide may not even be worth addressing in the first place, or rather, addressing the rich-poor divide may not be an enlightened/viable one if it is done in an over-zealous and excessive manner. As cautioned in the article, if we try to address this divide by taxing the rich excessivly to give to the poor, it will result in a crutch mentality in the poor, as well as cause the rich to flee the country to avoid the high taxation. Even if they don't flee, high taxation is a disincentive for working hard. Why work so hard if a large portion of your earnings is going to be siphoned off by the govt? A famous example is the French actor Gerard Depardieu, who migrated from France to neighbouring Belgium to avoid the high taxes which the French govt is rolling in to mitigate the Euro crisis. He famously said to the French President that what the govt is doing is actually punishing people for their talent (since the talented ones are those who earn high incomes).
Another example closer to home is Eduardo Saverin, one of the co-founders of Facebook. See HERE. He has renounced his US citizenship in favour of the Singapore passport, allegedly to escape the sky high taxes in the US. Singapore, by comparison, is a tax haven for many of the ultra rich, who prefer to park their money here so as to avoid their earnings from being eroded by the high taxes back home. Scandinavian countries, for example, have staggering taxation rates amounting to 60% or more (but then, they are welfare states)!