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Alternatives to Taxation When Combating the Wealth Gap and Poverty

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Alternatives to Taxation When Combating the Wealth Gap and Poverty Jörg Alt SJ Alternatives to taxation when combating the Wealth Gap and Poverty Compiled and ordered notes from interviews including cross-checks with publicly accessible material, prepared for future use. Language check and German quotes translated into English thanks to Dr. Sue Berning. alt 19.12.2019 2 Table of Content Table of Content .....................................................................................................................2 1 Introduction ....................................................................................................................7 1.1 Evaluation criteria ....................................................................................................7 1.2 The Philanthropist: Andrew Carnegie .......................................................................8 1.3 The contested: Bill Gates, Mark Zuckerberg .............................................................9 1.4 The structuralists: Nick Hanauer, Henry Ford ...........................................................9 2 Fight rent seeking “Financial industry” ......................................................................... 10 2.1 Present dangers ...................................................................................................... 10 2.2 The wrong approach ............................................................................................... 11 2.3 The right approach ................................................................................................. 11 3 Advance “Real economy” ............................................................................................. 12 3.1 Inequality and growth ............................................................................................. 12 3.2 Different level of distribution ................................................................................. 14 3.3 Social Market Economy: Competition and Rules .................................................... 15 3.4 Reduce profits, increase investment ........................................................................ 16 3.4.1 Status and development of private investment ................................................. 16 3.4.2 Invest into the social and ecological ................................................................ 17 3.4.3 Reviewing tax exemptions & laws ................................................................... 17 3.5 Implementing the “good life” ................................................................................. 18 3.6 Social partnership ................................................................................................... 19 3.6.1 Jobs, consumption and growth ......................................................................... 19 3.6.2 Share power over „means of production“ ......................................................... 20 3.6.3 Supersalaries & “atypical jobs” ....................................................................... 21 3.6.4 Conclusion ...................................................................................................... 22 3.7 Education, qualification, “ethics” ........................................................................... 22 3.8 Public investment, public employment ................................................................... 23 3.9 Conclusion ............................................................................................................. 25 4 International Context issues .......................................................................................... 25 4.1 Free Trade, Fair Trade, Customs, EPZs… .............................................................. 26 4.2 Forms of business ethics ......................................................................................... 30 4.2.1 Saving tax to increase investment? .................................................................. 31 4.2.2 Corporate Social Responsibility....................................................................... 32 4.2.3 Corporate Citizenship, Corporate Social Accountability, prizing externalities .. 34 3 4.2.4 Increase tax to increase investment .................................................................. 34 4.3 Development/Socially Responsible/Impact investment… ....................................... 35 4.3.1 Examples......................................................................................................... 36 4.3.2 International findings ...................................................................................... 37 4.3.3 Conclusion ...................................................................................................... 39 4.4 The case of Ferrostaal ............................................................................................. 39 4.5 DTAs and the question “Cui Bono?” ...................................................................... 40 4.6 The question of the Corporate Veil ......................................................................... 42 4.7 Developing countries’ need of funds....................................................................... 43 4.7.1 Sustainability and the exploitation of resources ............................................... 43 4.7.2 Addressing rural and urban poverty ................................................................. 43 4.7.3 Establishing social security systems ................................................................ 44 4.8 Tax cooperation between developed and developing states ..................................... 44 4.8.1 Visible split between OECD and G77 in Addis Ababa..................................... 44 4.8.2 Addis Tax Initiative/International Tax Compact .............................................. 45 4.8.2.1 Tax Inspectors without Borders (TIWB) .................................................................... 46 4.8.3 Status Quo ....................................................................................................... 46 4.8.4 Evaluation ....................................................................................................... 48 4.8.5 OECD or UN? ................................................................................................. 50 4.8.6 “Independent” opinions? ................................................................................. 50 4.9 Conclusion ............................................................................................................. 50 5 Specific Alternatives to taxation - Overview ................................................................. 51 5.1 Conceptual Clarification: Charity, Philanthropy ..................................................... 52 5.2 Donating money, in-kind or time ............................................................................ 53 5.3 Establishing NGOs, foundation or trusts ................................................................. 54 5.4 Interim conclusions ................................................................................................ 54 6 Context determining alternatives ................................................................................... 56 6.1 Historical context ................................................................................................... 56 6.2 Tax privileges for money, in-kind and time ............................................................ 57 6.3 German law regarding charitable giving ................................................................. 58 6.3.1 Discussion ....................................................................................................... 59 7 Trusts............................................................................................................................ 60 7.1 The unbundling of ownership rights as precondition to trusts .................................. 60 7.2 Trusts ..................................................................................................................... 60 4 7.3 Trusts and Foundations: Similarities and differences .............................................. 61 7.4 Trusts and German law ........................................................................................... 62 8 German foundations ...................................................................................................... 62 8.1 Categories .............................................................................................................. 62 8.1.1 Introduction, numbers ..................................................................................... 62 8.1.2 Foundations and fiduciary foundations ............................................................ 63 8.1.3 Privatnützig und Gemeinnützige Stiftung (charitable foundation) .................... 64 8.1.4 Family foundations .......................................................................................... 64 8.1.5 Business foundations ....................................................................................... 65 8.1.6 Stiftungsfonds ................................................................................................. 66 8.1.7 Other types ...................................................................................................... 66 8.1.8 Capitalization of foundations ........................................................................... 67 8.2 Private wealth and the utilization of foundations ....................................................
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