Last week an increase in tax rates for the rich in Taiwan was publicly welcomed by the bosses of TSMC, Foxconn and Delta Electronics – Morris Chang, Terry Gou and Bruce Cheng.
Under the new tax regime 1.5% of taxpayers, about 10,000 people with incomes of over $333,000, will pay tax at 45% up from the current 40%. Average earners will pay less tax.
In Taiwan, the average income of the bottom 5% is $1,500 while the average income of the top 5% is $150,000. Recently there have been protests in Taiwan about growing inequality.
A couple of years back Warren Buffett proposed that: “We need Congress to enact a minimum tax on high incomes. I would suggest 30% of taxable income between $1 million and $10 million, and 35% on amounts above that.”
Of the 400 richest Americans, “more than a quarter paid less than 15% of their take in combined federal income and payroll taxes,” said Buffett, “half paid less than 20% and — brace yourself — a few actually paid nothing.”
Buffett pointed out that between 1951 and 1954 the capital gains rate was 25% and marginal rates on dividends reached 9% “in extreme cases” and that, in the years from 1956 to 1969, the top marginal rate was 70% and the tax rate on capital gains was 27.5%.
“Under those burdensome rates both employment and GDP increased at a rapid clip,”said Buffett, “the middle class and the rich alike gained ground.”
In America the stumbling block is the Republicans in Congress who give sectarian advantage a higher priority than fair government.