Wealth Tax: Expropriation of the Rich or Capitalist Smokescreen?

Part One

A spectre is haunting Europe: the ‘Wealth Tax’ (known in Italy as the Patrimonial). This joke sums up what has now become a stock demand of so many of the "left", both inside and, above all, outside parliament and not just in Italy. By definition, a wealth tax is a form of taxation aimed at the rich, particularly the very rich, via a progressive rate that increases with the level of inherited wealth itself. For many this would be a measure of social justice: a means to redistribute some of the wealth that is presently concentrated in the hands of a few to the most economically disadvantaged sectors of the population. This is especially important in the present period, dominated as it is by the dramatic effects of the pandemic. In any case, its parliamentary supporters argue, this would by no means amount to a subversive manoeuvre to expropriate the bourgeoisie. It would simply mean implementing a provision in the constitution, by which citizens must contribute to public well-being in proportion to their economic circumstances.

Be that as it may, two deputies, Fratoianni of LEU (Liberi e Uguali, or Free and Equal) and Orfini of PD (Partito Democratico, or Democratic Party), had their proposal for such a ‘wealth tax’ immediately rejected by the government coalition of which they are part and, needless to say, by the centre-right, who rejected it for various reasons, not excluding some laughable ones, given the surrealist inconsistency of their arguments. And, yes, the proposal was very moderate, especially since other taxes were being abolished — including the IMU (equivalent of the Council Tax in the UK) on a second home. So, the proposal was for a tax of 0.2% starting from a base of €500,000, to reach 2% for assets over €50 million. The number of people it would have affected varies with each estimate, but in any case it seems that it would have involved around 6% of taxpayers and garnered a tax revenue of more or less ten billion. It would have been similar to the measure taken by the Spanish "left" government, which is also very timid, perhaps even more so; or that taken by the Bolivian left, which recently returned to government after the parliamentary coup in November 2019.

The fact is that, despite its timidity, the entire parliament did not even begin to consider a measure that, at most, would have only gently relieved the super-rich of what amounts to no more than a bit of pocket-money. One more proof, if you like, that despite all their talk about ‘the people’ and whose interests they claim to represent, the set of adventurers and parasites sitting on the parliamentary benches actually only represent one class: the bourgeois one, starting at the top.

Then again, raising taxes on higher income/assets would mean reversing the fiscal policy followed by governments around the world for some fifty years. Thus,

"if we had maintained the criteria of the time [up until 1974 — CB], today personal income tax rates would range from 12% to 86%, instead of the current shameful range that goes from 23% to 43%." (Marco Bersani, ‘E' ora che paghino i ricchi’, Il Manifesto, 28 November 2020)

And in fact, ever since the 1970s taxes have been reduced for people in the highest income brackets, while they have risen for the lowest earners. This is not surprising. In the face of reappearance of difficulties in the global cycle of accumulation, due to the fall in the rate of profit, the bourgeoisie tries to compensate in every way it can. One of these is exactly to lower taxation of the rich (including capital, of course), at the same time as asserting — at least that’s how it is presented — that if taxes are lowered at the top, the wealth saved will ‘trickle down’, benefiting every social class, because entrepreneurs would start investing again, thus creating wealth for everyone. In terms of a certain formal logic, such reasoning would be flawless, were it not for the fact that capital is only invested in the "real economy" when a rate of profit adequate to the size of the investment and a particular organic composition is ensured. In practice, the level of investment remains low and the money saved by tax relief mostly goes into financial speculation. In recent decades exploitation of the workforce has increased on all fronts while the conditions of existence of the proletariat are becoming constantly worse. It may seem a paradox, but it is not, that this is not enough to revive accumulation or, in other words, bring about a new phase of "prosperity". Lower taxes for the rich at the same time as increased taxation for those who have least — the proletariat and part of the petty bourgeoisie — have contributed to the enormous rise in social inequality, poverty and impoverishment, but "lower taxes for everyone” continues to be one of the most effective mantras for hypnotising the electorate, even the “popular” one.

Yet, if this is the "fiscal doctrine" of so-called neoliberalism, there is a whole panoply of ​​left-wing reformists who are convinced that doing the opposite, i.e. increasing taxes on higher incomes/assets, is the way to go to get out of the crisis and the economic and social havoc caused by the coronavirus. Bigger tax revenues can be used to restore social services (starting with health care), establish or strengthen forms of income support, especially for the unemployed and the underemployed (the whole gamut of precarious existence), as well as "Greening" industry. The upshot will be a gigantic increase in spending power and, therefore, an economic recovery on a fairer and more sustainable basis. All of this would, of course, see a grand return of classic state capitalism, that is to say the direct management of certain key sectors of the economy by the state.

Even in this version, however, bourgeois thinking is an empty boast, even if unwitting. Like their neoliberal counterparts, the left reformists cannot see that the root of the crisis lies in the insufficient valorisation of capital. In other words, too low an extortion of surplus value from the workforce. Both skip over the starting point and evade the basic question, which they believe they can solve with a fiscal sleight of hand: now in favour of supply, now in favour of demand (to use bourgeois language). After years of preaching ruthless "supply" policies (tax cuts for the rich, wage cuts, job cuts, etc.), promptly implemented by governments, the IMF itself is beginning to backtrack and now thinks that the profits of the most successful firms should be taxed more to keep the world capitalist system on track, which includes helping the population at the bottom of the social ladder to cope with the effects of the pandemic:

"This [the increase in taxes for rich] would help pay for essential services, such as health care and social welfare networks during a crisis that has disproportionately affected the poorest segments of society." (ANSA, National Associated Press Agency in Italy, 14 October 2020)

If the IMF, a representative of “capital in general", says things that certainly irritate the "many capitals" (the individual bosses; both expressions are used by Marx), it means that one of the thinking heads of the bourgeoisie, whose concern is for the overall interest of the system, is worried about possible social explosions. However, the IMF is equally worried about the not very encouraging economic outlook and for this reason, while it anticipates continued state intervention (and central banks), it argues that state aid must be selective, i.e. it must go to companies who are able to stand on their own feet, while the others — the so-called zombie companies — must meet their destiny, i.e. go bankrupt. In fact, it envisages a decisive devaluation of existing capital according to the rules of "economic Darwinism" (survival of the fittest), accompanied by selective state aid to "deserving" enterprises (another form of state capitalism) and by the implementation or maintenance of social safety nets to prevent or control any outbursts of social anger. Naturally, unproductive expenses will have to be cut as much as possible, starting, needless to say, with public sector workers. Incidentally, the recommendations of the IMF are not very different from the conclusions of a document drawn up at the end of December by the Group of 301 , of which Draghi is the best known exponent. They echo what the financier Soros has been saying for years, namely that to hold together a company that is creaking on all sides, it is necessary for those at the top to start paying taxes at least at the same level as their employees, who currently face a higher rate of taxation. Naturally, the most vulgar politicos, such as Salvini-style populists, regard Soros as a reincarnation of the eternal Jewish plot to take over the world. Their ‘old fashioned’ pronouncements reveal the hatred and terror of so many bourgeois that, if they were to pay ‘fair’ taxes, their profit margins would be reduced, along with their standard of living which would become “beyond one's means”. So, it is doubtful that governments — sovereign or non-sovereign — can really clamp down their fiscal hand on the rich. At stake, among other things, is the comfortable parliamentary seat that no "representative of the people" feels like risking by approving laws which bosses of every description recognise as a smokescreen, even if they aim to preserve their social system.

Part Two

While the bourgeoisie is wracking its brains to find solutions to this epochal crisis, even considering a partial revision of the fiscal policies of the last decades, the tax lever has become one of the main tools which reformists on the left believe will put an end to capitalist aggression and bring substantial benefits for the depleted pockets of the proletariat.

We are referring, of course, to the political elements gravitating around SiCobas, which has recently given birth to hybrid organisms with a combination of union and political features. Even given the different acronyms, they are often animated by the same people with very similar, or even exactly the same, programmes. From the Pact of Unity of Anti-Capitalist Action, to the Assembly of Combative Workers and others, a shopping list of objectives to be achieved, here and now, has been drawn up. It represents "at best" the essence of radical reformism.

By its very nature, this vision of the anti-capitalist struggle thinks that communism can make headway not only within the current relations of production (and therefore of distribution), not only within the current political-institutional structures — the capitalist state — but even in the midst of one of the most devastating crises in the history of capital. It is an extremely harmful vision, one that is catastrophic for the purposes of the class struggle. First, because it has nothing to do with the real world and, as they say, mistakes the desire for reality. Also, but not secondarily, because it entangles significant fringes of the more combative or less resigned proletariat in these cheap illusions, let alone beguiling various comrades and those who are sincerely convinced that this kind of "revolutionary trade unionism" (a contradiction in terms) is really practicable. The "shopping list" is well known and, in any case, easily available online (for example, on the SiCobas website). It ranges from the "guaranteed average wage for unemployed, underemployed, precarious and laid-off workers", to the classic "drastic and generalised reduction in working hours for equal pay: work less, work for all; for socially necessary work”2 , up to a “Wealth Tax”, naturally much more drastic than the one proposed by the centre-left parties. In fact, point 4 of the Action Pact document says: "The costs of the pandemic and the crisis must be paid for by the bosses, starting with a 10% tax increase on the richest 10% of the population whose proceeds are to be used to cover 100% of all wages and a guaranteed average wage for unemployed and precarious workers. Refusal to accept the state debt as an instrument to stifle proletarian and social demands.” Apart from the fact that the state debt, rather than a tool to stifle proletarian and social demands3 , is a tool to rob the proletariat and sections of the petty bourgeoisie, how could these measures be imposed on the bourgeoisie? Il Pungolo Rosso (Red Spur), one of the components of the Pact and member of SiCobas, argues that it is possible "by attacking the power of the bourgeoisie with the force of an extraordinary class mobilisation, to deprive them of their freedom to appropriate and dispose of the general wealth produced by the proletarians”.4 What does "extraordinary mobilisation" mean? Strikes proclaimed two months earlier or perhaps, in a "more" incisive way, all-out strikes, permanent marches, occupation of factories and companies in general? Depriving the bourgeoisie of the "freedom to appropriate wealth ..." means killing it as a class, drying up the source that gives life to the capitalist mode of production, but at this point an economic-trade union mobilisation, however extraordinary and radical, is grossly insufficient. "Taking over the streets" or "taking control of the factory" is not enough if large sectors of the proletariat, the most conscious, do not take power: power, through its revolutionary organisms (the councils), not the appointment of some minister in a ‘left’ government emanating from some bourgeois parliament. (It goes without saying that for us the active presence of the revolutionary party in the class is indispensable, so that awareness of the need for the revolutionary leap can mature inside significant sectors of it.)

History is full of examples where a magnificent proletarian surge was led by radical reformist pipers — it doesn't matter whether in good or bad faith — to momentous defeats. From the factory occupations of a century ago to the Popular Fronts of 1936 — to name some of the most painful proletarian defeats — an extremely determined proletariat halted at the gates of the bourgeois state and then paid most painfully for the consequences. But this is forgotten, or ignored, by the 21st century version of that socialist maximalism which has done so much harm to the working class. They want to impose measures on the bourgeoisie that would constitute the first, immediate measures of proletarian power. Yet it is never mentioned that first it is necessary to conquer that power, break the capitalist state machine and replace it with organs of proletarian self-government, with the dictatorship of the proletariat. On the other hand, once the proletariat has the strength to impose those "points" on the bourgeoisie, it might as well directly seize power for itself.

CB

• 1According to Wikipedia, an international organisation of financiers and economists devoted to “examining the consequences of decisions taken in the public and private sector”, generally abbreviated to ‘G30’.
• 2Let us remember that in capitalism ‘socially necessary work’ is that provided by the labour force in exchange for wages. Among other things, it is strange that the ‘list’ does not mention a reduction in the retirement age or a pro-working class reform of the pension system, unless we have overlooked it.
• 3This is what the bourgeois law enforcement agencies think of, especially if/when the social safety nets are insufficient for the purpose or the struggles exceed the permitted limits, perhaps getting out of hand and relinquishing control to the unions …
• 4See, on the SiCobas website, Pungolo Rosso, Patrimoniale: e con Grillo come la mettete?