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 ....................................................