Tax marketing

Never having really thought about it before, it occured to me that the marketing of a change of a country’s tax policy is quite a tricky issue, because it clearly shows how people are more afraid of losing something they have than eager to get something they don’t have yet — especially when what they get is a non-bankable idea. But let’s start from the beginning.

As long as I can remember, we’ve been sold on the idea that progressive income tax is just and fair. The strong can and therefore should carry more load, they said. That’s why people with smaller income have been paying less tax than people with big income. Then the strong said, “Wait! We’re the ones who give work to the others, and our factories and means of production depreciate, so politics must make sure we can do this in the future — or else!” And politics did just that, complying well-behaved so the system would survive. They created exceptions and loopholes for the strong and said this is just and fair, because otherwise the economy would be put at risk, and we need a healthy economy to survive and thrive.

Over the years the whole tax system got more and more complicated, which in return meant a lot of jobs for tax consultants, and everyone got used to the year in, year out modifications of tax law, closing old loopholes and creating new ones and so forth. But altogether everyone got used to the way it was and no one really made an effort to change the system. What for? It was just and fair. Or was it?

Enter the (German chancellor’s) financial adviser: “A tax rate of 25% for everybody is just and fair. There is no reason why a CEO should pay 45% tax on earned income and the company owner only 25% tax on unearned income. Plus, there will be no future eceptions and loopholes. And everywhere I speak, this clicks with the audience.” The explanation is of course, when you speak in front of privileged people only (most of them being both CEO and owner at the same time), hardly anyone will refuse. Try to do that when the audience consists of 1% board members and 99% workers, who will very unlikely be happier when you tell them that a tax advantage by working night shifts is cut.

The point is once again not what is, but how it feels. Anyone who can do basic math intellectually knows that same tax for everybody and all exceptions cut is an overall balanced equation — but it doesn’t feel like one. And that’s the problem with marketing the new justice and fairness. At the moment, they don’t feel as good as — never mind better than — the old ones. Who can you sell that to?

(Sidebar — Another whack on a journalists head: If you want an answer, just ask one question about one issue at a time. Asking two or more, you give the interviewee cover to answer none of them. Quote: Journalist: “Many citizens are more than upset that compulsory federal saving might take away their tax benefits: tax-priviliged nightwork, tax-deductible commuting expenses or reduced GST with food, for example. At the same time the government provides billions of Euros in financial aids for other coutries. Is this fair?” — Expert: “The question is, is it legitimate?” — Ouch.)

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