Why is it so difficult to tax the rich?

There is a paradox: A great majority of people would benefit from increasing taxes on the rich (and this is particularly true for inheritance taxes), but progressive tax reforms appear to run against what may be called a “tax barrier” in most countries: politicians who demand these higher taxes are either not elected, or they don’t implement these tax increases if they are part of the government. Fasthenrath et al. (2021) interview 25 mostly left-wing politicians, all members of the German Bundestag’s fiscal committee, in order to discover the political elites perceived tax barriers. Organised business interestests are found to be the major barrier, especially through long-term communication campaigns that seek to actively influence the voters tax preferences. The second major barrier seems to be a competence inequality: because tax debates require strong economic and legal competence, the more resourceful business interests and their political representations in conservative parties are able to dominate the tax debate. Left-wing politicians therefore retreat to pushing more on social spending, rather than the financing side of it (increasing taxes).

Author(s):  Florian Fastenrath, Paul Marx, Achim Truger & Helena Vitt
Date: 13.12.2021 Link to Article

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