Leadership Practice Before Leadership Theory

Leadership Practice Before Leadership Theory
China Times editorial (Taipei, Taiwan, ROC)
A Translation
May 28, 2012

Summary: A determined government will stick to its ideals and demand reform. It will stress fairness and justice. But the purpose of reform is to achieve one's ideals. Fairness and justice is not socialism. This is the anniversary of the luxury tax. This is the eve of the capital gains tax. Have administration officials considered the pros and cons? Do not allow leadership theory to override leadership practice. Do not allow empty rhetoric to replace hard reality.

Full Text below:

Over the past two years, the Ma administration has held high the banner of social justice. It hopes to narrow the gap between rich and poor. It hopes to change the "M-shaped society." But as we all know, the gap between rich and poor has widened. This represents a long-term change in the social structure. The change has international, domestic, and even cross-Strait causes. The Ma administration has oversimplified a complex process of evolution. It assumed that a few luxury taxes and capital gains taxes would rid us of injustice. Once again the Ma administration has adopted a one size fits all approach. It hoped to lay claim to righteousness. It hope to extricate itself from an increasingly embarrassing fiscal dilemma. The results prove otherwise. These policies merely throw gasoline on the fire. They merely intensify rich vs. poor class antagonisms. They depict the middle class as semi-impoverish. As a result the entire society lives in fear. Naturally it looks to a better tomorrow.

Take the luxury tax. This is considered an unassailable PC policy move that seizes the moral high ground. It asserts that everyone should be able to afford to own a house. But are peoples' lives really that tragic? "Are people on Taiwan really homeless? Hasn't the government long boasted that over 80% of the public owns their own homes?

It is not that people cannot afford housing. It is that they cannot afford to upgrade to a "decent home." What is a "decent home?" The media usually shows us luxury mansions. It says that people cannot afford them, even if they were to spend all their food money on house payments. But do ordinary people live in luxury mansions? If they don't, then what's wrong with imposing high land taxes and high real estate taxes on luxury mansions? The rich consider this chump change. Why drag the middle class into the equation?

Take housing prices in Greater Taipei. They are higher than for areas outside of Taipei. Far more expensive. But why? "Speculation!" is the Ma administration's standard answer. But speculators account for only three percent of all housing transactions. They have raised housing prices sky high. Prosecute these opportunists. But why lump the homes of the middle-class into the same category?

Taipei housing prices have risen for a variety of factors. For decades the government favored the North at the expense of the South. Cross-Strait relations have improved. Inheritance taxes have been lowered. Global capital has flooded Asia. This is the macro level. Now consider the micro level. Better city and county water quality, more convenient transportation, higher quality medical care, greater employment opportunities, and higher incomes, are all factors. Builders begin new projects. Brokers sell older housing units. If prices stray too far from market value, they fall naturally. Sellers naturally cut prices. If prices in other areas are too low, the government should do something about it. It should not artificially depress Greater Taipei prices. That is not fairness. That sort of fairness is fake.

Can a fake policy of fairness fool the people? One year ago the Ma administration had grand ambitions. Over 60 percent of the people supported the luxury tax -- a 15 billion dollar a year levy. It would enable justice to prevail. Fifteen billion in one year. But deduct luxury tax and land tax collection costs. How much does the government actually take in? Last year people complained about not being able to afford housing. This year they hold housewarmings. What percentage of people think justice has been "partially achieved?" Fame and fortune are "like fish and bear paws." One cannot have both. But one can have one.

Now take the capital gains tax. Minister of Finance Liu cited two examples. He justified the capital gains tax. Suppose a client earns four million in the stock market but fails to pay 200,000 in capital gains taxes? That is an injustice. But Minister Liu forgets. Individual investors must pay transaction taxes. According to the Securities Association, an individual trader must make three to four billion in transactions to make 4 million dollars. In other words, small investor transaction taxes already amount to millions. According to marginal tax rate calculations, small investors pay as much as 25%.

Minister Liu cited another example, Hon Hai chairman Terry Gou. He said in 2010 Guo earned 1 billion from stock sales, but  only paid 3.48 million in stock transaction taxes. Suppose we adopt the Executive Yuan's version of the capital gains tax. Start with 2010. By the end of 2009, Hon Hai's closing price was 151.5 NT. In 2010 Hon Hai shares ranged from 155.5 NT to 106 NT. How could Gou possibly have made one billion? Assume everything was sold at the peak. One share earned 4 NT. In other words, how could Guo dispose of 250,000 Honghai shares before and after January 5, 2010? Is it really possible? Assume the face value was the price paid. The Executive Yuan version cost calculation does not match. Is this fair?

Political appointees must of course defend the government's policies. But their defense must be based in fact. They must be objective and neutral. The first example stigmatizes small shareholders. The second stigmatizes major shareholders. The Taiwan stock market is like Hong Tong County. Small investors and large investors alike are victims of unfairness and injustice.

The capital gains taxes are a case of "If only I knew then what I know now." The administration is riding a tiger. It can neither stay on nor get off. But we say better late than never. Better to know than not know. Gasoline and electricity price hikes and capital gains taxes cannot be implemented simultaneously. Therefore the administration should ask itself which policy is more urgent. Policy implementation always involves priorities.

A determined government will stick to its ideals and demand reform. It will stress fairness and justice. But the purpose of reform is to achieve one's ideals. Fairness and justice is not socialism. This is the anniversary of the luxury tax. This is the eve of the capital gains tax. Have administration officials considered the pros and cons? Do not allow leadership theory to override leadership practice. Do not allow empty rhetoric to replace hard reality.
   
中時電子報 新聞
工商時報 　2012.05.28
社論－勿讓理論領導實務、勿讓務虛取代務實
本報訊

    　馬政府這兩年高舉社會公義大旗，希望縮小Ｍ型社會的貧富差距，殊不知，貧富差距的形成、乃至於擴大，是社會結構的長期調整過程，其中有國際的、國內的、甚至兩岸的方方面面因素。馬政府把一個複雜的演變過程簡單化，以為幾個「奢侈稅」、「證所稅」的政策，就可以去化不公不義；馬政府又把一元化的政策多元化，以為既可坐享公義美名，又可健全日趨困窘的財政現況。事實證明，這些提油救火的政策出台，貧富階級對立由此激化，中產階級也因此被打成準貧族，整個社會惶惶不可終日，自然「指日可待」。

    　先說奢侈稅吧，這塊標榜「居住正義」的王命鐵牌，希望老百姓都能買得起房子。但要問的是，台灣的老百姓如此悲慘？連一套房都住不起？政府不是對台灣自有住宅率高達8成以上，一向沾沾自喜嗎？

    　所以，老百姓不是住不起房，正確的說，是住不起、或換不起一套像樣的房。什麼叫一套「像樣的房」，媒體通常會舉豪宅為例，說老百姓終其一生不吃不喝，也買不起。豪宅，這是一般人住的嗎？如果不是，單純對豪宅課以高的地價稅、房屋稅，不行嗎？富人不在乎這些小錢，為何要胡攪蠻纏的把中產階級拖下水？

    　再以大台北的房價為例，是比台北以外的地區要貴，甚至貴得多，何以致之？投機，這是馬政府的標準答案。試問，3％的投機客能把房價拉到雲端，就算是，把投機客繩之於法就是了，有必要連中產階級的房子一起放鍋裡嗎？

    　台北房價上漲，和政府幾十年來重北輕南、兩岸關係的和解、遺贈稅調降、資金由全球湧向亞洲，都有密不可分的關聯性，這是從大處看；從小處看，肇因於各縣市的水質、交通、生活便利性、醫療品質、就業機會及所得。建商推新案、仲介賣中古屋，如果定價和以上的大處、小處偏離太遠，自然門可羅雀，自然要降價；其他地區房價漲不起來，政府也應該朝以上幾個方向努力，而不是把大台北的房價打下來，就認為公平了，這種公平，是假的。

    　一個假公平的政策，能唬弄老百姓？看看一年前馬政府的豪情壯志：超過60％的人支持奢侈稅，一年徵150億，要讓居住正義得以實現。一年了，別說150億了，把奢侈稅扣掉稽徵成本和少收的土增稅、契稅，政府賺到什麼？哪一個去年抱怨買不起房的，今年有喬遷之喜；又有多少百分比的人認為，居住正義被「部分實現」了。名與利，雖如魚與熊掌，不可兼得，但總得有一個落袋吧。

    　接下來看證所稅，財政部劉部長舉了兩個例子，說明復徵證所稅的正當性。一個是在股市賺了400萬的散戶，如不繳納20萬的證所稅，是不公不義。劉部長可能忘了，散戶在交易過程中，要繳證交稅，根據券商公會的計算，一個散戶進進出出、得交易3、4億，才能賺400萬，換言之，該散戶所納之證交稅即上百萬，以邊際稅率算，高達25％。

    　劉部長舉的另一個例子，是鴻海董事長郭台銘，說他99年賣股賺了10億，只繳了348萬的證交稅。假設證所稅依據政院版本，自99年實施，成本價應為98年底的鴻海收盤價151.5元，而觀察鴻海99年的股價高低點為155.5~106元，郭台銘如何賺到10億？如果全部都在最高點售出，一股賺4元，換言之，郭董於99年1月5日前後，處分了25萬張鴻海股票，這可能嗎？如果是以面額作為成本價，又與政院版的成本計算不符，這公平嗎？

    　政務官為政策辯護，理所當然，但講出來的話必須有所本，必須客觀中立，前一個例子，散戶被汙名化了；後一個例子，大戶也被汙名化了。台股就像個洪桐縣，散戶也好、大戶也罷，都成了不公不義的代名詞。

    　證所稅如今落到個「早知如何，必定推遲」的境地，現在推也不是，不推也不是。我們必須說，知道無論早晚，晚知總比不知、無知要強，既然油電雙漲和證所稅不能同步為之，就看哪一個政策有迫切性，施政優先總要有個次序吧。

    　一個有為政府，堅持理想與改革、強調公平與正義，很好！但不要忘了，改革的目的在於實現理想，公平正義也不是社會主義。值奢侈稅屆滿周年、證所稅開徵前夕，朝中諸公是否斟酌損益，勿讓理論領導實務，勿讓務虛取代務實。