sales tax bolt income tax rate net worth

A sprinter and a nation's majority dodge taxes
concentrated wealth income distribution

How The Rich Are Winning

People are not stupid; taxes are. There is an intelligent alternative. We trim, blend, append three 2010 articles from: (1) Associated Press, July 11, on Japan by Mari Yamaguchi; (2) BBC, July 12, on Bolt; and (3) CBS MarketWatch (a pro-business site), July 20, on the rich by Brett Arends.

by Mari Yamaguchi, by BBC, and by Brett Arends

Battered by voter backlash over the prospect of higher sales taxes, Japan's ruling Democratic party was headed to a heavy defeat in a parliamentary election Sunday, media exit polls showed.

Prime Minister Naoto Kan, in office only a month after his predecessor abruptly quit, clearly hurt his party's chances by proposing Japan raise its 5 percent sales tax to as high as 10%.

"It's the taxes. Kan threw that out suddenly, and it really hurt them. It cost them the votes of women, and particularly housewives who look after family finances," said Tomoaki Iwai, political science professor at Nihon University in Tokyo.

Soon after taking office in early June, Kan came out strongly with warnings that Japan needed to take dramatic steps to reduce its public debt, which is more than twice the nation's GDP -- or face a Greece-like fiscal crisis.

But his initially buoyant approval ratings slid after he proposed that Japan seriously consider doubling its sales tax.

The Democrats' setback may also reflect a general disillusionment among voters who handed the party a landslide victory last year amid high hopes for change and more accountability in politics.

While the Democrats scored points for freezing many public works projects viewed as wasteful, the public was sorely disappointed by former Prime Minister Yukio Hatoyama's involvement in a funding scandal and his failure to keep a campaign promise to move a contentious U.S. Marine base off the southern island of Okinawa.

JJS: More rational avoidance follows:

Triple Olympic champion Usain Bolt has announced he will not compete at August's Aviva London Grand Prix because of Britain's tax laws.

The 100m and 200m world record holder may not now compete in the UK again until the 2012 Olympics.

New regulations mean the 23-year-old Jamaican could lose more money than he would earn from competing at the Crystal Palace Diamond League event.

Athletes competing in the UK are liable for a 50% tax rate on their appearance fee as well as a proportion of their total worldwide earnings -- which for Bolt, who earns millions from endorsements, could be hugely costly.

HM Revenue & Customs won a case in 2006 brought by tennis star Andre Agassi. It successfully argued that as well as the prize money he accrued, a proportion of Agassi's worldwide sponsorship income was also earned during his time in the UK and was therefore taxable.

The UK's tax laws have proved a handicap to the country's chances of hosting events. Uefa admitted in 2008 that Wembley missed out on the 2010 Champions League final for that very reason.

The Government has since agreed to waive the rule so London can host the 2011 final, and competitors in the 2012 Olympics are also exempt.

Golfer Sergio Garcia has admitted in the past that he limits his appearances in the UK because of tax laws.

JJS: The longed for low tax rates seem to concentrate wealth.

There are fewer than 100,000 Ultra-HNWIs (High Net Worth Individuals) around the world. A third of those are in the US. Ultras make up 1% of the high net worth but held 36% of the high net worth's wealth.

The wealthy saw their net worth bounce back sharply last year. While those with $1 million or more did pretty well, the real story was the boom among the ultra rich: Those with more than $30 million to invest. Ultras increased their wealth by a striking 21.5% in 2009, far more than the average in the HNWI segment as a whole. A disproportionate amount of wealth remained concentrated in the hands of Ultra-HNWIs.

The US has one of the most unequal income distributions in the world. In this field, most of the developed world is pretty much in line -- Japan, Italy, Australia, Canada, Norway, Great Britain. The US? Our income distribution is more in line with Zimbabwe, Argentina, and El Salvador. We think of Russia as the land of oligarchs, but America's inequality is actually slightly greater than Russia's.

The average Fortune 500 chief executive pocketed $10.5 million in 2008. That's more than 300 times the average worker's pay. Back in the 1940s through 1980, the ratio was typically about 40 times.

Corporate America’s after-tax profits rocketed 43% in the first quarter, a new record high.

The top US rates of tax kicks in on each dollar of ordinary income over $374,000 a year. The top 1% of Americans paid an average federal income tax rate of 19% in 2007. The top 5% of earners paid an average rate of less than 18%. There are ways to minimize tax -- like calling your income "capital gains." In many cases, it means people making tens of millions a year are paying lower tax rates than their chauffeurs and receptionists.

JJS: Is the problem we don’t tax the rich or that we let wealth concentrate in the first place? Is there an alternative to taxing one’s success? Well, sure. Try geonomics.

Instead of tax income (something the rich are better at dodging than are anyone else) we could forget all about taxing and instead concentrate on the commonwealth, on society’s surplus, on economic values that are already ours. What are they? All the money we spend for the nature we use -- the annual rental value of land, resources, and fields of knowledge -- belong to us all. Those flows of money are what we should recover and share, instead of tax incomes.

We can recover them by charging full-market value for resources leases, land titles, spectrum licenses, patents, copyrights, corporate charters, etc, then sharing out the surplus public revenue via a Citizens Dividend. Then watch the wealth gap close. The stars show up for your meets. And the geonomic party keep its seats in the legislature.


Editor Jeffery J. Smith runs the Forum on Geonomics.

Also see:

State AG Clears Petition to Collect Signatures

Switzerland allows teens to sell themselves

World's rich got richer, so how about a break?

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