By Elin Brimheim Heinesen
Let’s discuss a topic that often leads to contention in the political arena: taxation, particularly when it involves property taxes and imposing higher taxes on the wealthy. Is this advantageous or disadvantageous for society? In this article, I will argue that requiring the wealthy to pay more in taxes, such as property taxes, it would be beneficial – not only for society as a whole, but especially for the housing market.
Those in favour of the authorities imposing higher taxes on the wealthy are often accused of being communists. According to their accusers, higher taxes only lead to an inflated public administration, and everyone ends up oppressed by a tyrannical regime that strips away individual freedoms. Some are also indignant that their hard-earned tax money is used to finance what they perceive to be an overly large, ineffective, and incompetent public administration plagued by nepotism. They see it as a waste of money. But does it really have to be that way?
Should the Wealthy Have the Right to Pay Proportionately Less Tax Than Ordinary People?
Is it possible that taxation could be an effective tool to protect what you and other ordinary people own, so it doesn’t all end up in the hands of a small wealthy elite? Much evidence suggests that higher taxation on the wealthy can help ensure that the gap between rich and poor doesn’t become too large and can directly prevent the rich from monopolising almost all of society’s assets, while the rest remain in debt and may barely make ends meet from month to month.
Let me emphasise that when I speak about higher taxes here, I certainly don’t mean that ordinary families should pay more. On the contrary. Nor do I mean that highly paid professionals like lawyers or bankers should necessarily be taxed more than they are now. No, I am talking about the ultra-rich – those who can afford to speculate in buying up several properties to rent out to others at exorbitant prices. Because why should those who have the most pay proportionally much less in tax than you and I, who can barely keep hunger at bay?
The purpose of imposing a heavier tax burden on the ultra-rich is to lower your taxes! It is not about expanding public administration. It is also not about being envious of people who have done well and envying them their wealth. No, it is about justice for hardworking ordinary people. It is about reversing the trend so that what ordinary families own does not increasingly end up in the hands of the super-rich, who already have more than enough and do not need all these properties, more than you and I and other less affluent people do.
By taxing the wealthy more, your tax can be reduced, so the money that the wealthy may have cleverly extracted from you and other ordinary people – including by not paying their fair share of taxes and driving up prices- can be returned to your pockets.
Lower Taxes for Low- and Middle-Income Earners Increase Their Purchasing Power
Our tax system currently burdens hardworking ordinary people, while the ultra-rich often avoid paying taxes—or pay much less tax proportionally than the average citizen. This inequality—together with the severe inflation of recent years—means, among other things, that ordinary families are under such significant economic pressure that many feel forced to sell their assets, resulting in properties likely ending up in the hands of the wealthy.
By requiring the rich to pay more tax, our authorities have a tool to prevent this development. They can redistribute the resources of society by easing the tax burden on lower-income earners at the same time, thereby increasing their purchasing power and enabling them to better afford their mortgages, rent, or the goods and services they buy locally. This, in turn, stimulates the economy and lays the foundation for more jobs.
Higher taxation of the ultra-rich simply means that you and I would pay less tax, leaving us with more of our own income. If the wealthy paid a proportionally equal share of taxes and fees as everyone else, the country’s total tax revenue would increase. This means more funding for essential public services that may have been underfunded for decades. There is a real need for better healthcare services, more educational opportunities, a stronger judicial system, and so on.
Taxation Can Prevent the Wealthy from Driving Up House and Rental Prices
The challenge is getting the ultra-rich to sell off the properties they have accumulated. At the moment, wealthy individuals enjoy many privileges and a high income from substantial passive revenues. Therefore, they rarely need to sell anything. On the contrary, they simply secure more passive income through speculation – such as buying multiple houses, where they outbid other potential buyers who are less wealthy than them and who have no chance of offering a higher price for the houses, only to then rent out these houses at rental prices that no ordinary people can afford to pay. In this way, the rich drive house and rental prices upwards, allowing only other wealthy people to afford buying homes, while they simultaneously take pleasure in the rising value of their purchased properties.
The rich particularly benefit from the fact that there is no property tax in the Faroe Islands! This encourages them to buy and accumulate even more properties, which further reduces the availability of affordable housing and drives prices even higher. Thus, the wealthy can (mis)use others’ poverty and housing needs to become even richer.
Higher house prices and the accumulation of more properties by a few make it increasingly difficult for ordinary people to afford to buy or rent a home. When the rich have almost total control over the housing market, it effectively prevents low-income individuals from accessing what they minimally need to survive in society. If nothing is done about this distortion in the Faroe Islands, we can expect a new wave of emigration from the Faroe Islands.
But there are solutions. By imposing higher taxes on the ultra-rich, we indirectly encourage them to sell off their properties, making more available on the market. If the wealthy are required to pay property tax on properties used solely for speculation, it becomes less profitable to own so many properties. Consequently, there is a greater likelihood that they want to sell so that more homes will return to the market. If the supply of homes for sale or rent increases, prices will decrease, giving ordinary low-income families a chance to afford to buy or rent homes again.
Prevent the Ultra-rich From Seizing All Power and Ensure a More Just Society
Higher taxation of the ultra-rich is not about expanding the public administration, but about balancing the power and property distribution in society more equitably. As it stands now, both the public sector and low- and middle-income groups are losing more and more properties, which end up in the hands of the wealthy. The only way to ensure more affordable housing, which ordinary people can afford to buy, is by imposing higher taxes on the ultra-rich. This approach ensures that the resources in society are more evenly distributed, so you and your household can afford to own more and increase your own wealth.
Higher taxes have been strongly demonised, especially by those who have the most to lose—namely, the rich. However, it is a crucial tool to use if one desires a fairer society with more economic justice. It acts as a safeguard against the ultra-rich acquiring even more properties, which prevents ordinary people from owning their own homes. Without imposing higher taxes on the ultra-rich, there is nothing to stop them from taking over nearly all the resources and thus dominance in society. Ultimately, this means that your children and grandchildren will inherit a world where they are propertyless, without economic security, and without the possibility of owning or buying properties.
In summary, taxing the ultra-rich is purely about reducing your taxes, so you can afford more – not about expanding public administration. It is about protecting your household’s future and ensuring that society does not allow a small elite to gain exclusive rights to all properties and thereby power in the future. Taxation is the only effective tool we have to guard against this growing inequality and to provide all citizens with a fairer foundation for life, enabling everyone to secure their economic future.
The fundamental idea is that higher taxes for the very wealthy can create a more balanced society. It allows ordinary citizens to access necessary resources and assets, ultimately leading to greater economic equality and social stability. By ensuring a fairer distribution of society’s resources, we can build a stronger and more inclusive society where everyone has the opportunity to thrive.
