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What’s in a Name? Selling Tax Hikes on the Rich

Deputy Prime Minister Nick Clegg arrives in the Members' Lobby of the House of Commons.
Wpa Pool
Deputy Prime Minister Nick Clegg arrives in the Members' Lobby of the House of Commons.

The list of countries raising taxes on the rich continues to grow. France. Canada. Italy. Britain. And, most likely in 2013, the United States.

All of these countries have arrived at the same inevitable math: their governments need money. There is one group that still has the most money. So they are going where the money is.

But since raising taxes on anyone can be politically fraught, political parties on both sides have taken to creative tax branding. The key to selling a tax, it seems, is all in the name.

Consider Britain. When deputy prime minister Nick Clegg started pushing a new wealth tax on people with only moderate wealth, his party quickly came up with a clever marketing strategy. It was called an “emergency tax” that was needed urgently. And since it would apply to people with homes worth £2 million or more, it was the “emergency mansion tax.”

In booming London, there are plenty of homes and apartments worth £2 million that would hardly be considered mansions. And valuing homes for tax purposes can get complicated. But Clegg's party, the Liberal-Democrats, say the mansion tax is “simple, it’s fair, it’s unavoidable.”

Best of all, it includes the word “mansion.”

On the other side of the aisle, the conservatives have taken to calling a move to means-test pension benefits “the granny-wealth tax.” Markl Reckless, a conservative MP, said that moves to take away bus passes, winter fuel payments and TV licenses for wealthier retirees is not a tax on the rich. It’s a tax on “grannies.” And no one wants to tax their grandma. (Read more: How Many Will France's Rich Tax Reach?)

In France, the tax on high earners has become the “millionaires’ tax.” Tax lawyers say the tax will also hit soccer stars, pop singers, big name artists, and the occasional doctor and lawyer. But taxing “les riche” and millionaires is a lot more popular than an “artist’s tax.”

Finance ministers in France and Germany this weekend came together to support a tax on financial transactions. It would apply to trades of stocks and bonds. But to sell it, the ministers are calling it the “Robin Hood tax,” providing voters with a nice moral fable to support.

In the United States we have the “Buffett Rule,” trading on the good , trusted name of Warren Buffett. It’s much better than the “entrepreneur tax,” since many of the people affected by the tax are entrepreneurs who sell their companies for one-time liquidity event. (Read more: Do Tax Crackdowns on the Rich Pay Off?)

All of this recalls the clever rebranding in the United States of the estate tax. In the mid-2000s, conservatives renamed it the “death tax,” making it seem like a tax on dying, which everyone does eventually. When it came up in Congress again in 2010, the left tried to change its name to the “Paris Hilton tax,” implying that it’s a tax on spoiled rich kids.

We’ll see next year which name voters believe.



-By CNBC's Robert Frank
Follow Robert Frank on Twitter:
@robtfrank

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