Bryan Gould: Civilisation depends on taxation

Donald Trump is sensitive about low estimates of his fortune. Photo/Getty Images

Donald Trump's mind, as we all know by now, works in mysterious ways, but one of the less expected oddities is that, according to recent reports about his sensitivity to being misrepresented, he gets particularly incensed if it is suggested that he is worth less in dollar terms than he says he is.

He will therefore no doubt have been upset about his recent slide down the list of American billionaires; his net worth has fallen, it is reported, by $500 million or so.

What is interesting, however, is what it tells us about how the president judges the worth of people. It seems that, in his view, it is a person's worth in dollars that tells us most of what we need to know – and that, in turn, casts an informative light on how Donald Trump and his fellow billionaires view the world.

I have always been puzzled as to why, after the first few billions, it seems so important to the typical billionaire to go on amassing more and more wealth. The answer seems to be that these "wealthoholics" see themselves as engaged in a kind of macho contest as to who is the biggest and richest.

They, however, would no doubt tell it differently. They would say that their wealth is a true reflection or measurement of the talent they possess and the efforts they have made, and that it is a proper reward for the contribution they have made to society.

Unfortunately for them, the facts are against such self-serving fairy stories. Research by, amongst others, Nobel Prize-winning economist Joseph Stiglitz, shows quite clearly that the best chance one has of becoming wealthy is to be born into a wealthy family and that most wealthy people gain their money as rentiers – that is, they do not work or do anything much else of economic value, but simply derive an income from their existing or inherited assets.

Donald Trump himself, of course, is a leading example of that paradigm. He also exhibits a further characteristic of the super-rich – their antipathy to paying tax.

Their attitude towards paying tax is exemplified by the notorious defence offered by Leona Helmsley when she was charged with tax evasion.

"We don't pay taxes," she said. "Only the little people pay taxes."

Donald Trump's endorsement of this sentiment has had of course some seriously significant economic consequences. The "tax reform" he finally persuaded Congress to put in place had the effect of saving billions for the richest Americans and had to be financed by major cuts to healthcare and other public services on which the poorest and most deprived depend.

We cannot, of course, expect that anyone – rich or poor – should like paying taxes, but we might at least hope that most people are thoughtful enough to understand that none of us could prosper if we did not, as a society, finance the infrastructure and services on which a modern economy depends.

Indeed, it can be (and is) argued by the experts that it is precisely the rich who are the greatest beneficiaries of public spending because they gain the largest benefit from the technological and legal supports without which an advanced economy could not successfully function and which have to be funded somehow.

There is after all not one of us – however clever, competent or just plain lucky – who could, from scratch and unaided, make the shirt on his or her back. We are all dependent for our current living standards on the efforts and achievements of millions of others – from both other places and parts of society and from earlier times.

A civilised society depends on this huge collective effort and maintains those civilised standards only by providing, through taxation, the resources in the public domain that are needed.

Given that tax revenue has to be raised, it makes sense to ensure that the obligation to pay it is fairly applied, and that it does not, for example, tax income but leave capital gains untaxed, or allow those most easily able to pay to avoid their obligations while the rest of us pay up.

It is questions such as these that are presumably to be addressed by the new government's working party on taxation.