A French expression might have to be rewritten soon: “Mieux vaut faire envie que pitie” (it is better to entice envy than pity). Basically the expression means that you’d rather have people think that you are doing well even if it is not true, because you do not want them to pity you.
This expression conveys two opposite sides of a single coin though. On the one side, you do not wish to induce pity on you, preferring to deal with your problems and to deal with them yourself. This is a noble feeling since pity is not a value. On the other side of the coin, the expression supposes that doing well, possibly in the context of wealth, will attract not a feeling opposite to pity, such as happiness or admiration for the person considered, but envy.
Envy is the feeling that dominates the reflection on taxation in many local and national government offices. From US President Obama’s Fair Share Tax, to French President’s 75% “Millionaire tax,” an unidentified group called “the rich” is deemed responsible for paying a so-called “fair share” of what they earn to support government budgets.
One recent piece of news from a little Belgian town near Liege seemed to represent pretty well the envy-led policy of taxing “the rich” because they are or appear richer than others (almost anyone is “rich” compared to someone else, especially in western countries).
Oupeye was the site of a steel factory that was bought by ArcelorMittal. Unfortunately, in early 2013 ArcelorMittal announced it was closing down several of its operations in the Liege region, due to “weakening of the European economy and the resultant low demand for its products.” The news that 1,300 direct jobs might disappear resulted in the unions calling for strikes.
On its website, the town of Oupeye published a note on the 2014 budget explaining that the closure of the ArcelorMittal factory in their town had financial consequences on the budget: “when [the factory] was running at 100%, it brought in €6 million ($8.3 million) in revenues out of our €30 million ($41.6 million) town budget.”
So how did they manage the “loss”?
The note explains that the conservative administration of the town budget since 2007 enabled them to create some kind of rainy day fund of €9 million ($12.5 million) in order to cope with such a problem as the closure of the factory. But they do not wish to use it now, and prefer to apply “structural measures” year after year instead.
While we manage to save jobs (40% of the budget is dedicated to staff costs) and to keep on offering quality services to the inhabitants of Oupeye, we also continue to subsidize sports clubs and cultural organizations which allow for social cohesion and generational diversity.
So how did they do it?
They slightly reduced expenses (such as subsidized meals to employees of public services and subsidized organizations) and reduced the amount of money they are borrowing. And they slightly raised taxes of course… and created new ones:
“We did whatever we could to reduce operating costs, but we also looked for a few small taxes here and there,” the mayor Mauro Lenzini explained.
Some taxes have been increased, and two others have been created: one on private swimming pools (estimated to yield €30,000 [$46,600] in revenues), and the other on people owning a horse for their own enjoyment (€99 a year per horse, estimated to yield €11,000 [respectively, $137 and $15,300])
Many people reacted negatively, especially to the second tax, “judging that horse owners are not necessarily rich and it is unfair to tax them.” The mayor insisted: “This means €8 a month, I don’t think it is going to hurt the budget of a home that owns a horse. Adding up all these taxes will enable us to use our savings less quickly.”
Like most of the time in Europe, people don’t rebel against the act of taking from some to give to others, or the act of taxing in general, but against taxes aimed at them personally. What are people owning a horse trying to do? Entice pity:
“We are scandalized and this time, we decided to let everyone know. Why are they asking us for money?” . . . “We are average Joes here, who regularly sacrifice to pay for our horses’ food, care and horse shoeing and we pay a sales tax on all of that like anyone else.”
So what exactly “rich” means in the taxman’s mind?
Arlette Liben, in charge of Finances for the town, indicates: “We did not want to touch to low incomes. I am not going to say that the person who owns a swimming pool or a horse is rich, but with the current economic situation, we should above all try to protect low incomes.”
It is of course not clear. What is being considered rich, or richer than others? What is next? Owning a computer, a smartphone, a watch, a TV, leather shoes as opposed to cheap sneakers? This simply doesn’t make any sense, except “taking the money where it is” or where the taxman thinks it is. There is no end to this.
Another problem is the general mindset: the people who own a horse or a swimming pool might have thought “fair” to tax people with a higher revenue more than them. They might have approved and said nothing, or even supported a higher tax on higher revenues. Now that they are deemed “richer” than others, they think it is unfair. I personally could not afford a horse and the costs that go with it, but I don’t look at those who can in terms of being richer than I am, and I certainly don’t think I am entitled to part of their revenue to pay for sports clubs and cultural organizations that supposedly allow for social cohesion and generational diversity. This is not about who can pay, this is about the immorality of making some pay for others.
Bastiat talked of the State has “that great fiction by which everyone tries to live at the expense of everyone else.” I don’t think he thought of it as “social cohesion.”