TAXES AND FINANCE CAPITAL: BACK TO THE FEUDAL STATE

Every tax is a theft for financial oligarchs

By Jean Ziegler

[This article published in: SoZ-Sozialistische Zeitung, May 2007, is translated from the German on the World Wide Web,  http://www.vsp-vernetzt.de/soz-0705/070503.htm. Jean Ziegler is a UN special ambassador for the right to food. His most recent book is “The Empire of Shame. The Struggle against Poverty and Oppression,” Munich 2005.]


“Class Struggle. Arguments against the Empty State Treasury” is the title of a little book published by Attac Switzerland at the end of 2006. This book explains why empty state treasuries exist in rich industrial countries and how these treasuries are plundered. Jean Ziegler wrote the foreword.

Heiner Flassbeck is chief economist of UNCTAD (United Nations Conference on Trade and Development). He is responsible for the annual Trade and Development Report published in September in New York and Geneva. This report is regarded as the most important, most critical and most visionary analysis of the world economy, a reference work for governments and central banks all over the world that is more illuminating than the yearbook of the World Bank and the annual report of the International Monetary Fund.

Taxes are the corrective to the furious free market. They safeguard the public interest, redistribution, public functions and public services. They are a constitutive instrument of the democratic state. Flassbeck writes about the attitude of contemporary financial oligarchs toward taxes: “The democratic state is a corrective against these oligarchs because it questions their superiority at least in some partial areas. Abolition of democracy is not far from their position.”

TAX OFFICIALS ARE HIGHWAY ROBBERS

The antinomy between the bounty hunters of international finance capital and the democratic constitutional state is absolute. The prophetic postulate for “worldwide stateless governance” comes from former World Bank president and investment banker James Wolfensohn. In other words, profit maximization of finance capital is maximized when the world market regulates itself autonomously – free from any normative interference.

Democratic constitutional states are desired in such elite democracies. Several mercenary organizations like the World Trade Organization, the International Monetary Fund and central banks independent of the state are all that is needed. Light years separate the worldview of the oligarchs of globalized finance capital from the worldview of democracy. The confrontation occurs on a special terrain: taxes and financial institutions.

Paying taxes is ontologically unbearable to most bounty-hunters. This is true for social fees and every kind of solidarity contribution. For the oligarchs, tax is equal to a confiscation. Tax officials are highwaymen. The oligarchs of globalized finance capital see themselves as the all-knowing, omnipotent rulers of the world and the only engines of value creation and economic progress.

Tax officials are useless, despicable beings. The state in whose name they confiscate is wasteful, unproductive and arrogant. A horror vision haunts the finance shark, the forced transfer of a considerable part of his profit to the superfluous inefficient state machine. Tax is theft or robbery for the average investment banker, assets manager or stock market speculator. Preventing or at least minimizing this theft is the sacred obligation of the private banker; he owes this to his clients.

Banking secrecy aids and abets this intrigue. More than a third of all offshore assets of the world are managed by institutes resident in Switzerland. Tax evasion is not a criminal offense according to Swiss law. Therefore no legal aid is necessary. The 2001 “Montbourg report” (Montbourg was president of the investigatory commission on capital flight of the French National Assembly) estimated the share of untaxed offshore assets in Swiss bank accounts at around 90%. Deutsche Bank estimates the share at over 70%.

Personally this plundering of the state treasury of our neighboring democratic states does not especially disturb me. These states have the constitutional instruments to end the mischief of the Helvetic banking secrecy, the bottomless hypocrisy of local bankers and the service allegiance of the parliament (Bundesrat). They fail! Negotiations over bilateral treaty II between Switzerland and the European Union show this again.

CAPITAL FLIGHT KILLS

When more billions of euros of illicit money flow from Germany and are hoarded in the Ali-Baber vaults of Geneva, Zurich and Basel, no one dies of hunger.

The situation is very different for the people of the third world. When the corrupt rogues plunder the state treasuries in Morocco, Gabon, Indonesia and Honduras and transfer their spoils to Switzerland instead of paying taxes, the communities are bled white. Hospitals are without medicine and schools are without teachers. Malnutrition, misery and the despair of millions upon millions of tormented people are the direct consequences of capital streams from countries of the Southern hemisphere.

100,000 persons die every day of hunger or its immediate consequences. In 2005, a child under ten starved to death every five seconds. 852 million people are permanently and gravely malnourished, one of six persons on our planet. Wealth overflows for a tiny few!

There is no fatality here. A child who dies today of hunger is murdered. The world order of globalized predator capitalism is not only murderous. It is also absurd since it kills without necessity.

For big customers, the Swiss banks build their branch offices in the exotic finance paradises, for example the Bahamas. 34 Swiss branch bank offices are located in the capital New Providence.

The pirates emphasize discretion. They are afraid of the light of the public. Income-, assets- and inheritance-taxes are unknown in the paradise of Bahamas. An original institution, the IBC (International Business Company), guarantees absolute anonymity. Am IBC is founded with an original capital of $5000 in a maximum 24 hours. Legal- and registration costs are negligible. The IBC is actually a limited company or stock corporation. However the names of the stockholders, executive persons and members of the board of directors are not identified. A straw man (or a straw woman) and a post office box are enough. Since the 1990 IBC act, around 110,000 such companies have been established. Around 10,000 are added every year, according to the Financial Service Board.

Schwerdtfager, former director of the North Rhine Westphalia “Organized Criminality” division, says: “Organized crime is intensified capitalism.” The borders between legal and criminally-gained capital fade in the tax paradises.

Concerning taxes and income distribution, Switzerland is one of the most unequal countries in the world: 90% of the taxpayers own only 30% of all assets. The state economizing to death is the goal of Helvetic reactionaries who want banking secrecy inscribed in the constitution. With incredible aggressiveness, they codify the policy of empty treasuries. Tax cuts for the rich are the direct cause of the organized debility of the community.

As one result, the tax shortfall legitimates the policy of austerity. There is no more cynical sentence than “One must tighten one’s belt.” How tight? According to the Caritas study of June 2005, over 550,000 people in Switzerland live at or below the poverty level. Are they drug addicts or vagrants afraid of work? No! The overwhelming majority of persons in Switzerland living in misery and daily anxiety about the next morning are the so-called “working poor,” decent hardworking families who are swept away and have no chance for a tolerable existence because of the ridiculously high costs of living and their obscenely low incomes.

WHERE IS HOPE?

Pierre Bourdieu wrote: “Neoliberalism is like Aids. It first destroys the immune powers of the victim.” The neoliberal delusion would make us believe the economic life only obeys natural laws. The rapidly expanding social inequality, the economic misery of many families, the deep psychological insecurity, the existential fear and the lawlessness promoted by predator capitalism in Switzerland are understood as “natural,” irreversible processes by many of our fellow citizens. The theory of the natural law of the “invisible hand” of the market is a terror theory, obscurantism, an irrationality of the worst kind.

The French revolution began 217 years ago with a tax conflict. The delegates of the Third Estate wanted the aristocrats (and the church princes) to pay tax. Louis XVI refused. The Third Estate constituted itself as the National Assembly. In the night of August 4, 1789, the National Assembly declared the radical abolition of the feudal system. In 1793 the National Assembly resolved to sacrifice the king.

The struggle over tax justice is one of the basic prerequisites for an active, socially just state. In Switzerland, its outcome is more uncertain than ever before. Only one thing is certain. Victory or defeat depends only on our democratic mobilization and collective conscientization. Bertolt Brecht wrote in "Mother Courage and Her Children":

The day will come,
the page will turn for us.
This is not far away.
We the people will end
the great war of the big bosses,
all the traders with their slaves
and their war- and death dance.
The new world of the common man
will shake their old world.
The day that will come
depends on the action of you and me.
Whoever does not march with us
must be encouraged to join.