The Gap between Rich and Poor: The Ministry of Finance should not be an Accomplice
China Times editorial (Taipei, Taiwan, ROC)
A Translation
October 16, 2007

Globalization and new technological developments are relentlessly changing the world. But to some people, the world is not flat. In fact, it is less and less flat, because life is harder than ever. During the past decade, more and more middle income families have found themselves joining the ranks of the poor. This worsening income disparity is something the ruling regime must face up to.

Yesterday this paper, in an article entitled "Taiwan's Nouveaux Pauvres," pointed out that globalization, new technology, industrial restructuring, and other factors, have given birth to a Nouveaux Pauvres class outside of the traditional class of "old, infirm, sick, and children." Its numbers are estimated at 1.38 million people. These were members of the middle class who formerly enjoyed a comfortable existence, but have suddenly become borderline poor. They do not qualify for the government's low income household subsidies. When they fall on hard times, they may be tempted to take the quick way out.

According to the Directorate General of Budget, Accounting and Statistics (DGBAS) family income survey, the wealth disparity between Taiwan's households, after reaching a 90 year high, has diminished. But has it really? According to newspaper opinion polls, 84% of those surveyed felt that the wealth disparity was serious, and 51% of those surveyed worried about becoming poor. Obviously public perception and official statistics are poles apart.

The increasing gap between rich and poor on Taiwan over the past decade has exceeded everyones' expectations. According to Ministry of Finance Financial Data Center figures, the ratio of households with annual incomes in excess of 10 million NT vs. those with annual incomes below 370,000 NT has increased from 1:48 to 1:55. Among households with annual incomes over 10 million NT, the average household income is just under 20 milllion NT. This is 836 times the income for households with annual incomes below 370,000 NT. These figures are shocking.

But the Directorate General of Budget, Accounting and Statistics and Financial Data Center reports grossly underestimate the income of the wealthy. Past investigators relied primarily on surveys. The wealthy often underreport their incomes. Genuinely poor people are hard to to locate. Capital gains and profits from real estate transactions are even larger loopholes. These are the major sources of income for the wealthy. Financial Data Center tax revenue figures do not include overseas income and capital gains. In recent years, many bosses of newly listed companies received cash dividends approaching 100 million NT. High tech firms award their staff bonuses and produce many millionaires. By contrast, eight out of ten low income households squeak by on fixed salaries. In recent years wages for labor have stagnated. Consequently the income of the wealthy has increased at a rate far exceeding that of the poor. An increase in the gap in between rich and poor is inevitable.

In its annual report the Asian Development Bank bluntly stated that the fruits of Taiwan's economic growth are being enjoyed exclusively by the wealthiest 20% of households, and this will endanger future economic growth. The result of the increasing gap between rich and poor is weak consumer demand and increasing social tensions. Nepal and Burma all living examples.

The widening gap between rich and poor is a result of globalization. It is especially serious in the US. Former Fed Chairman Alan Greenspan is dee[;u concerned. In his newly published autobiography, he pointed out that technological innovation and competition-driven globalization has become the primary factor in many countries' centralization. The wages of high tech specialists have skyrocketed, while middle and low income salary growth has stagnated. The income of the wealthy over the past 25 years has grown rapidly, causing the gap between rich and poor in America to worsen day by day. He felt that reducing wealth inequality would depend on education and a policy of open immigration.

Famed American economist Paul Krugman pointed out that between 1979 and 2005, middle class American household net income grew only 13%, while the richest 1/10th of one percent of household incomes grew 296%. Most people assume the the increasing gap between rich and poor is due mainly to advances in technology and globalization. Krugman believes politics plays a more important role. The large scale tax cuts of George Bush Jr's conservative Republican administration in particular have created these unforgiveable results.

In recent years the government has aggressively promoted its tax reduction policy, going down the same road as the Bush II administration. If we examine the government's income redistribution policy, we see that 90% of it depends on social welfare, and only 10% of it depends on tax revenues. Tax cuts reduce wealth disparity by a factor of only 0.15. This means income redistribution by means of tax cuts doesn't work. Expanding the scope of tax cuts may lead to a point where benefits vanish altogether.

The government's real estate tax cuts and inheritance tax cuts have benefitted mostly the wealthy. In order to upgrade industry, major stockholder dividends enjoy investment tax cuts, income from negotiable securities are tax exempt, and future income tax exemptions for individual capital gains are currently under study. Because interest income accounts for six tenths of the income of the wealthy, an interest income related tax cut measures will only worsen the disparity between rich and poor.

Our nation's tax rates are already among the lowest in the world. A tax policy flagrantly biased in favor of the rich has turned Taiwan into a paradise for the rich and a hell for the poor. Poor people bear a disproportionate part of the tax burden. Is this the society everyone was hoping for? Unfortunately the Ministry of Finance, which is responsible for national tax policy, has become a "tax reduction department," and forgotten the meaning of tax equity and justice. If this trend is not reversed, the Ministry of Finance will become an accomplice responsible for widening the gap between rich and poor, in which case it may as well change its name to reflect its true function.

中時電子報
中國時報 　2007.10.16
貧富差距擴大 財政部莫成幫凶
中時社論

　全球化與新科技的發展，讓世界變平了；但是對某些人而言，這個世界是不平的，甚至越來越不平，因為生活比以前更苦了。最近十年來台灣越來越多中等收入的家庭發現自己正在邁向貧窮之境，這種所得分配惡化的趨勢，已經到執政當局必須正視的時候了。

　本報在昨日製作的「台灣新窮人」專題中，指出在全球化的效應下，受到新科技的發展、產業轉型等因素影響，一群有別於傳統「老、弱、病、童」的新窮人誕生，估計至少有一三八萬人。這原本是一群日子過得不錯的中產階級，卻突然跌落貧窮的邊緣，由於不屬於政府低收入戶補助範圍，一旦陷入困境，最容易走上絕路。

　依主計處家庭收支調查，台灣的高低所得家庭貧富差距在九十年達到最高峰，之後趨於緩和，但台灣的貧富差距真的縮小了嗎？根據本報民調顯示，八成四受訪者認為貧富差距嚴重，五成一受訪者擔心淪為窮人，顯然民眾的實際感受與官方統計有很大的距離。

　十年來台灣的貧富差距擴大，超乎各界預期。財稅資料中心統計，年所得逾千萬的富人與所得卅七萬以下貧窮家戶相比，十年來的差距由四十八倍增加至五十五倍；其中，千萬大戶平均股利所得近二千萬元，更是窮人的八百三十六倍，相當驚人。

　而不論是主計處或是財稅資料中心的報告，都嚴重低估富人的所得。前者以調查為主，富人容易低報所得，真正的窮人則找不到，更大的漏洞則是未統計股票與土地買賣所得，這是富人最大的財富來源。財稅資料中心的納稅所得，則未包括海外所得與證券交易所得。

　近年來，許多上市櫃公司大老闆領取現金股利動輒上億元，高科技的員工分紅亦產生許多百萬富翁；相對地，低所得家戶有八成以上靠薪資所得，近年來勞工薪資成長停滯。因此，富人財富增加的速度遠超過窮人，貧富差距擴大是必然的。

　亞洲開發銀行在年度報告中直指，台灣經濟成長果實由所得最高廿％的家庭獨享，將危及經濟成長。貧富差距擴大的結果，民間消費低迷，也會引發社會緊張。尼泊爾、緬甸都是活生生的例子。

　貧富差距擴大是全球化的現象，美國尤其嚴重。聯準會前任主席葛林史班亦關切貧富差距問題，他在最新出版的自傳中指出，新科技創新與競爭帶動的全球化，成為各國所得集中的主要因素。專業技術者的工資大幅攀升，中低所得者薪資成長停滯時，而富人所得在過去廿五年來快速成長，使得美國貧富差距日益惡化。他認為要縮小貧富不均，要靠教育與開放的移民政策。

　美國知名經濟學者克魯曼（Paul Krugman）指出，自一九七九年至二○○五年間，美國中產家庭的實質所得僅成長十三％，但最有錢的千分之一的家庭所得成長了二九六％。多數人認為貧富差距擴大主要是新科技進步與全球化因素使然，但是，克魯曼認為，政治扮演更重要的角色，保守派共和黨主政時期，尤其是小布希時代推動大規模減稅政策，造成不可原諒的後果。

　近年來政府不斷推出減稅政策，與布希政府走相同的路。檢視政府的所得重分配功能，有九成是靠社會福利，只有一成來自租稅，而租稅縮小所得差距的倍數只有○．一五倍，顯示租稅的所得重分配功能不彰，如果再繼續擴大減稅規模，那麼可能連這一點點功能都不見了。

　這些年來政府不斷提出減稅案，從調降土增稅到遺產稅，受惠最大的都是富人。此外，從促進產業升級條例來看，大股東股利所得可享受投資抵減，而且證券交易所得免稅，未來更研議取消個人的股利所得稅。由於千萬富豪的股利所得占六成以上，任何有關股利的減稅措施，都將使得貧富差距更加惡化。

　我國的租稅負擔率已是全球最低，租稅政策嚴重向富人傾斜的結果，台灣成為富人的天堂，窮人的負擔反而加重，這樣的社會難道是大家所期盼的？令人遺憾的是，負責國家租稅政策的財政部幾乎成為減稅部，完全忘了租稅的公平與正義，如果這樣的趨勢無法扭轉，財政部淪為擴大貧富差距的幫凶，那財政部乾脆改名算了。