EL ESPECTADOR

The Problem With Hating Your Rich Neighbor In A Globalized World

Demonizing the rich, a pastime of Colombia's political Left, doesn't help social progress. Yes, the rich must pay a high share of taxes, but capital and opportunity cross borders like never before.

In Bogota, Colombia
In Bogota, Colombia
Mauricio Rubio

-OpEd-

BOGOTA — Colombia's Leftist parties agree on at least one thing: They hate the rich. Capitalists dodge taxes, inherit everything, are insensitive, predatory, rabid reactionaries. They finance paramilitary gangs, buy off journalists, bribe politicians and form cartels. The caricature is crass, except perhaps for the complex matter of taxes, which has yet to be properly debated.

All but the technocrats generally steer clear of this topic, and the Left's only "big picture" regarding taxes is the notion that the rich should pay the country's revenue shortfalls without complaint. Citing corruption and waste, the rich in turn work to earn themselves tax exemptions and basically regulate how much they pay through "tax planning." With a buoyant underground economy and a limited punitive capacity, the state has then resorted to raising nominal tax rates, penalizing those who do pay their fair share of taxes. Not that these citizens are entirely resourceless: Colombia has recently witnessed an absurd rise in tax refund claims.

The Left practically rejoices at these compensations, paid for by all taxpayers, and anyone questioning who will foot the bill for rectifying someone's individual rights is branded neoliberal. For the Left, the only priority is to spend and spend. When students are offered conditional grants, the Left is outraged. Conditions?! It must be a trap, and is definitely an insult. The social welfare state is magnanimous and unlimited in its resources — like crisis-ridden socialist Europe, only without the euros.

Getting the rich to pay taxes so the middle class can pay a little less is of concern the world over. Big capital seems to decide where and how much tax it pays. But aside from certain speculative activities, extractive or mining enterprises or some of the grotesque concessions in free zones, money invested by the rich can benefit society. People may disagree on the amounts, but because investment finances innovation, this benefits everyone. Left-wing economist Dean Baker estimates that for every dollar invested, society receives five. Next to these social benefits, the profits of companies such as Google, Twitter and Facebook are peanuts.

Class warfare

In Colombia, we keep hearing complaints about cell phone operators, but it's better to have them than not. When the rich are absent, like in Cuba, the most incorrigible socialists wish they were there. Yet the novelist William Ospina — an admirer of Venezuela's leadership — drafts a list of conditions for potential investors in Cuba, admirably showing how the Left sees its relationship with the rich: We decide where to spend money, and you pay!

The rich provide examples for youngsters about the risk-taking inherent in seeking wealth. Unless it's criminal in intent, the appetite for wealth can fuel development. Look at communist China! A socialist minister in France recently said, "The country needs more young people who want to be billionaires." He's right, especially when fewer people are looking to emulate or become politicians and civil servants. Yet the demonstration effect will not by itself reduce poverty and inequality, and wealth redistribution needs the taxes paid by the rich.

There is a scarcity of patronage and philanthropy in Colombia, which may be another consequence of the Left's discourse. When will the socialists tell us who the "virtuous" rich are, besides their own relatives? Donations are like the carrot, and Colombian tax policies should perhaps evolve toward enticing with a carrot rather than threatening with a stick: more recognition and cooperation, and less contempt and confrontation.

Dialogue is useful, and not just with communist guerrillas! The Left seems more inclined to build a new country with guerrilla captains involved in kidnappings than with businessmen who dodged taxes. Or frankly even with those who have paid taxes, not to mention occasional kidnapping ransoms, or with businessmen currently financing peace talks with FARC guerrillas. Apparently their opinions count for little.

It is no coincidence that the world's great donors are "gringos." They too pay their taxes grudgingly, sabotage social spending and live in a country with vast income gaps. But the rich are respected there, and some of them give back. Knowing about taxes as they do, French economist Thomas Piketty must amuse them. The dear man is calling for more levies on capital — in a globalized economy with tax havens, markets competing for investors and no universal authority to implement his well-meaning proposals.

Increasing taxes on the rich is an economic pursuit as ancestral as farming and trade. The art now is knowing how to actually achieve it in a world without frontiers.

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