The patrimonial proposed by Pd and Leu is pure demagogy. Marattin’s post (Italia Viva)
The proposal of the Democratic Party and the Leu seems more dictated by the desire to tickle some demagogic instinct, as the Communist PRC did in 2006 with the slogan "even the rich cry". What the economist Luigi Marattin (Italia Viva) wrote on Facebook
Some deputies of the Democratic Party and of Leu presented an amendment to the 2021 Budget Law which proposes two things:
1) A new wealth tax on the net wealth of individuals, with a variable rate depending on the level of wealth (0.2% between 500,000 and 1 million euros, 0.5% between 1 and 5 million, 1% between 5 and 50 million, 2% over 50 million)
2) Abolition – again for individuals – of the Imu and stamp duty on current accounts and securities deposit accounts.
The proponents (source: Nicola Fratoianni's interview with Il Manifesto on Sunday 29 November) declare that this move would result in greater revenue for the tax authorities of around 18 billion euros each year.
A very high figure, given that Pedro Sanchez's proposal for a property tax in Spain has a much more modest objective (428 million euros).
The following are just some of my preliminary considerations, based on the version of the amendment that was sent to me by one of the signatories (the official one is not yet available), from whom I also requested the calculations that led them to that figure; not having sent them to me yet, it may be that these evaluations of mine are subsequently denied.
FIRST PROBLEM: DO YOU REALLY WANT TO PROTECT PRODUCTION?
The new property tax should only concern individuals (Mr. Mario Rossi) and not joint-stock companies (Mario Rossi Spa). Here in reality there is already the first problem. If the goal, I imagine, is not to hit production, there is no reason why the more structured companies (= joint stock companies) are excluded from the new tax and not even the smallest companies and self-employed workers (which have no legal personality but they are partnerships), if they have a wealth of more than half a million euros.
SECOND PROBLEM: ARE YOU SURE THAT THE STATE WOULD RECEIVE 18 BILLION EUROS PER YEAR FROM THE BALANCE SHEET?
According to the latest available data (source: Bankitalia and Istat, 2017) the net wealth of Italian families is equal to 9,743 billion euros.
However, this would not be the tax base of the new taxation, since Pd and Leu propose that only wealth exceeding 500,000 euros is taxable.
However, there are two sub-considerations that we can make to express very strong doubts on the fact that this proposal entails a greater revenue for the state of "about 18 billion euros a year".
Let's see them briefly.
FIRST UNDER CONSIDERATION: DID YOU LOOK WELL AT THE DISTRIBUTION?
Both the average (206,000, source: Bankitalia, Survey on Italian household budgets) and the median (126,000, same source) are significantly lower than the threshold beyond which the new taxation would act (500,000).
Considering that, moreover, the amendment abolishes some taxes whose total revenue – but also concerning legal persons – is over 18 billion (source: 2019 Tax Revenue Bulletin, Department of Finance), it is really not understood how mathematically the proponents can affirm that this maneuver is expected to generate a greater overall revenue of "about 18 billion".
But, again, I reserve the right to look at the counts that the proponents must have done, if I can access them.
SECOND SUB-CONSIDERATION: IS TAXING YOUR SAVINGS A GOOD IDEA?
For simplicity, let's pretend that the previous under-consideration does not exist, and assume that the tax base subject to taxation is the entire net wealth of Italians (€ 9.743 billion).
More than half (54%) is made up of homes.
The remainder (45%) is made up of savings (shares, bonds, current accounts, mutual fund shares, etc.).
So almost half of the tax base (savings) is therefore perfectly mobile: you can move abroad with a simple click on your smartphone, and thus go to finance investments – private or public – in foreign countries.
It is not clear what can prevent an Italian natural person from moving his savings abroad, to avoid taxation (and it is good to remember that imposing capital controls is impossible within the European Union). Furthermore, the “richer” subjects are those who have the greatest possibility (information, resources, contacts, etc.) to be able to access financial investment opportunities abroad.
The risk therefore is that taxation has a double negative result: not producing revenue (at least on almost half of the tax base) and depriving the Italian economy of resources potentially usable within it, to create wealth and development.
Which, among other things, happened punctually in the two previous times in which an attempt was made to introduce national taxation on perfectly mobile tax bases: the so-called Italian Tobin Tax and taxation on yachts, both in 2012.
For just over half (54%) the tax base is made up of houses (first, second, third, etc.). Which, unlike money, cannot be moved.
But on them, as is known, a patrimonial taxation already exists, and it is the IMU. Which has already undergone a marked increase since 2012, which has contributed to depressing the real estate market.
If this is the game, however, it is not clear why the proponents do not ask – assuming that the taxes are really wanted to be increased, instead of decreasing them – simply to reshape the Imu, shifting the weight on the properties of greater value (and perhaps seizing the opportunity to update cadastral income), instead of making a big mess by abolishing it and replacing it with a new tax. And in any case (see previous point), to think that such an operation could bring "about 18 billion euros" is pure madness.
CONCLUSIONS
The proposal of Pd and Leu seems more dictated by the desire to tickle some demagogic instinct, as it did in 2006 Communist Refoundation with the famous slogan "even the rich cry".
With slogans and the pursuit of applause by popular acclaim or social media, however, it is difficult to govern.
Or not?
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/la-patrimoniale-proposta-da-pd-e-leu-e-pura-demagogia-il-post-di-marattin-italia-viva/ on Mon, 30 Nov 2020 08:52:36 +0000.