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The Case For The Rich To Pay More Income Tax

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What Sylvia Lim said in parliament about making the rich pay progressively more tax makes sense. According to Cambridge Professor HA-JOON CHANG “They achieve this because they live in economies that have better technologies, better organized firms, better institutions and better physical infrastructure – all things that are in large part products of collective actions taken over generations.”

According to Prof Chang, none other than Warren Buffet himself had admitted to this truth in an interview on TV.

The following quote is from Chang’s book “23 Things They Don’t Tell You About Capitalism”.

Finally, a word of warning to the rich of the rich countries, lest they become smug, hearing that their own poor are paid well only because of immigration control and their own high productivity.

Even in sectors where rich country individuals are genuinely more productive than their counterparts in poor countries, their productivity is in great part due to the system, rather than the individuals themselves. It is not simply, or even mainly, because they are cleverer and better educated that some people in rich countries are hundreds of times more productive than their counterparts in poor countries. They achieve this because they live in economies that have better technologies, better organized firms, better institutions and better physical infrastructure – all things that are in large part products of collective actions taken over generations (see Things 15 and 17).

Warren Buffet, the famous financier, put this point beautifully, when he said in a television interview in 1995: ‘I personally think that society is responsible for a very significant percentage of what I’ve earned. If you stick me down in the middle of Bangladesh or Peru or someplace, you’ll find out how much this talent is going to produce in the wrong kind of soil. I will be struggling thirty years later. I work in a market system that happens to reward what I do very well – disproportionately well.’

So we are actually back to where we started. What an individual is paid is not fully a reflection of her worth. Most people, in poor and rich countries, get paid what they do only because there is immigration control. Even those citizens of rich countries who cannot be easily replaced by immigrants, and thus may be said to be really being paid their worth (although they may not – see Thing 14), are as productive as they are only because of the socio-economic system they are operating in. It is not simply because of their individual brilliance and hard work that they are as productive as they are.

The widely accepted assertion that, only if you let markets be, will everyone be paid correctly and thus fairly, according to his worth, is a myth. Only when we part with this myth and grasp the political nature of the market and the collective nature of individual productivity will we be able to build a more just society in which historical legacies and collective actions, and not just individual talents and efforts, are properly taken into account in deciding how to reward people. ”

– 23 Things They Don’t Tell You about Capitalism

  HA-JOON CHANG

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