Page 101 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

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USD 10 billion windfall inheritance. Now imagine a second scenario, the one in which her actual L’Oreal stock gain is factored in, but in this scenario she still pays her Piketty tax. As it happens, in this second scenario her net worth goes from USD 10 billion to almost precisely the same over fteen years; USD 10 billion.
e progressive capital gains tax rate that Piketty proposes happens to be roughly equal to Bettencourt’s actual gains – a stupendously strong after tax return. e most successful traditional software company ever, as well as one of the most successful cosmetic brands in Europe, have achieved compound annual growth rates that only just marginally exceed the proposed wealth erosion tax. One wonders if Piketty perhaps made use of Bettencourt’s gains as a rough guide to determining his apparently arbitrary progressive capital gains tax rate.
Were one to apply the same Piketty tax logic over a substantial period of time to less dominant rms, but to rms that are both innovative and essential to job creation – Tesla as an example – it becomes clear that Piketty’s tax would essentially cause the re sale of equity by major shareholders to simply pay their tax.
Tax Laws in the Land of the Living
Irrespective, it is unlikely that any Western democracy will come any- where near to implementing the proposed progressive capital gains tax. Putting aside the glaring fault inherent in the proposed tax rate itself, there remains the simple reality that it is far more di cult to pass radical tax laws when one’s political and economic opponents are living, than it is when they are dead.
If there is to be no substantial increase in capital gains tax then, and Western democracies stick with punitive estate duties, two legitimate arguments can be lobbied by the rich. Firstly, for the individual who has created wealth, the primary rationale for its accumulation – putting aside Gulfstreams, New York penthouses, and super yachts – is that hoarding is not for one’s own utility, but rather it is for the bene t of one’s children and their children.
Secondly, and of more practical urgency, is the fact that estate duty is payable immediately. is is true in practice in respect of assets that are often extremely illiquid, including family country estates, high-value metropolitan property, and on substantial portions of ownership in
“...there remains the simple reality that it is far more di cult to pass radical tax laws when one’s political and economic opponents are living, than it is when they are dead.”
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