By on September 1, 2011

If Ferrari is known for one thing, it’s super-fast, good-looking cars. But if Ferrari is known for two things, that second thing would be its uncanny ability to separate the wealthy from their hard-earned (or not) cash. And apparently the brand is so good at extracting revenue from its super-wealthy clientele that it doesn’t mind a little competition. The Wall Street Journal reports that, when asked by the Italian paper Republica how governments should overcome their budget crises, Ferrari Chairman Luca DeMontezemolo replied

You have to begin by asking it of those who have most, because it is scandalous that it should be asked of the middle class

Class warfare, or just the natural perspective of a guy who regularly charges the super-rich $2,300 for Alcantara trunk liner and $1,800 for a spare wheel? We report, you decide…

Get the latest TTAC e-Newsletter!

39 Comments on “Ferrari: Tax The Rich, We Can’t Do It All Ourselves!...”


  • avatar
    PintoFan

    Doesn’t seem particularly controversial to me. I wonder what he would say about the U.S. increasing the gas guzzler/luxury tax though for the vehicles his company sells. Seems like it would be a pretty non-political way to raise some more revenue, at least outside of the “car guy” segment of the body politic.

  • avatar
    JJ

    Class warfare is a pretty relative thing. In a country like Italy or right here in the Netherlands, raising income tax on the ‘rich’ even more would definitely be uncalled for and as far as I’m concerned could be defined as class warfare.

    If this same proposition was made in the US though, where there’s less income equality than in nations like Ghana, Jordan, Russia, Yemen etc etc…the whole movement that’s complaining about raising income tax (or rather, revoking the Bush tax cuts) on anything one makes over 200K (or in that neighbourhood) seems kind of silly to me from where I’m standing considering the US’ current financial woes.

  • avatar
    ClutchCarGo

    Why is taxing the rich class warfare, while refusing to provide even basic healthcare services to the poor is not?

    • 0 avatar
      aspade

      Because there is a difference between commission and omission.

    • 0 avatar
      gslippy

      The poor in the US can always get basic healthcare services.

      • 0 avatar
        ClutchCarGo

        Really? That guy cleaning the Wal-mart after hours who’s making $8.05/hour w/o benefits (since WM outsourced that work to the lowest bidder) can see a doctor about his shortness of breath without it costing him 2 days of take-home pay? Because if he has to choose between paying a doctor and paying his rent, he’s going to have to pick rent. Or maybe you think that he can get in line at the “free clinic” that’s open 1 day a week, or just show up at the ER across town because they can’t legally refuse to see him?

        I suppose that it’s only warfare when someone can fight back. Otherwise, it’s just annihilation.

      • 0 avatar
        SKUSA_boy

        Exactly, a poor person doesnt get basic healthcare services until he ends up in the hospital. Then the hospital kicks them out as soon as they can get away with it.

      • 0 avatar
        gslippy

        @ClutchCarGo: In short, yes.

        The definition of a job without benefits is that it has no benefits. Health care is not a human right; it is a luxury that will always favor the ‘rich’. Lately, I’ve heard some say that ‘decent’ housing is a human right – this stuff never ends.

        We are fortunate to live in a society that requires hospitals to treat the poor as needed, but that cost is borne by the rest of us (and our employers) who do have benefits.

        Wal-Mart doesn’t stooge its employees because it’s mean; its goal is to offer the lowest retail prices possible. This makes Wal-Mart shoppers responsible; if they were willing to pay more for Wal-Mart’s products, then Wal-Mart’s employees could have benefits. ‘Overpaid’ sports figures are a great example of this – the millions they are paid is directly related to the fans’ willingness to pay high prices for seat tickets. When fans decide they won’t pay $1000 for a playoff seat, that’s when you’ll see salaries decrease among the celebrities we love and hate. The opposite is true of Wal-Mart’s employees.

      • 0 avatar
        ClutchCarGo

        @gslippy: So we agree about the facts on the ground. The question, then, is what should be a human right, because in the natural order of things there simply are no rights other than those that we, society, choose to grant ourselves. Tho few would consider me a Christian, my deepest sense of decency is informed by the basic Christian value of being our brothers’ keepers, which means that no one in the richest country on earth should go hungry, unsheltered or sick while the wealthiest of us have riches almost beyond what they can possibly use for themselves. As your example demonstrates, we cannot count on the free market to contribute to that end without defining minimum standards of behavior (since the free market places not value on human decency).

        We must, as a society, decide on a minimum level of support for the least among us, thus establishing “human rights”. But I’m offended that every suggestion of asking the rich to give more is decried as class warfare, while cutting programs to allow the poor a subsistance level of living not only isn’t considered class warfare, but is declared a financial requirement.

      • 0 avatar
        SimonAlberta

        @gslippy

        The goal of Walmart is NOT to provide the lowest possible prices. The goal of Walmart is to make the maximum possible profits for its’ shareholders. It does this by forcing suppliers to accept marginal prices which often lead to substandard conditions for employees and, occasionally, total collapse of the suppliers’ business.

        Not relevant to the article, but just saying.

  • avatar
    stuki

    “The rich” are those making $100-$200+K. They buy Bimmers (for now.)

    The ones who bought the government, and gets the increased revenue in the form of bailouts, buy Ferraris. Make sense now?

    Less flippantly, more and more F cars are being sold to existing F owners, increasingly in the financial industry. These guys are government’s partners in wealth confiscation and extraction. Paying a million in taxes on your 50 million bailout, is a pretty good deal for those who can get it.

    I bet most people, even Tea Partiers, could get around to supporting a 99% income tax on all income above national average, derived from work in the financial sector. And one of the few holdouts, would be, tah-dah, Ferrari.

    • 0 avatar
      gslippy

      “I bet most people, even Tea Partiers, could get around to supporting a 99% income tax on all income above national average, derived from work in the financial sector.”

      Not this Tea Partier. Is there something wrong with working in the financial sector, or something that makes it not ‘work’?

      Somebody working in the financial sector is managing your retirement account, if you’re fortunate enough to have one. I suspect they’d be less motivated to excel at it by taking home only 1% of their salary.

      • 0 avatar
        golden2husky

        There is nothing wrong with working in the financial sector, or any other legit business, or being rich. The desire for wealth is not unhealthy. What is wrong is when those that make the most get away with paying the least taxes, based on a percentage of income. Warren Buffet was noted for saying that he paid about 17% in taxes, while the vast majority of those that worked for him paid 37%. I may be off by a few points (all those days of living on generator power and no TTAC have clouded my memory) but the basic premise is the same. Everybody should pay the same percentage of income taxes. And percentage is the only metric that matters.

      • 0 avatar
        newcarscostalot

        @golden2husky +1000.

      • 0 avatar
        SP

        I agree that there are some problems with taxing capital gains (usually the province of the rich) at different rates than ordinary working income.

        But part of what allowed Buffett to make that point might be that he doesn’t conspicuously consume, and deliberately avoids taxes when he can. I’m not saying it’s wrong … but it undermines his point a little. He can only commute to work so many times, so raising gas taxes won’t hurt him a bit. It’ll just make him feel less guilty. And, maybe he should buy something stupid … how else will us poor folks get a crack at his money?

        Anyway, for a multi-billionaire to advocate raising taxes in a bracket that affects Joe the Plumber is a little ridiculous.

      • 0 avatar
        gslippy

        @golden2husky: If you’re describing a flat tax, I agree with you. But our tax structure is so politicized with exemptions that a flat tax has absolutely no chance of becoming law. I don’t think there should be any exemptions, and I receive plenty of them.

        As for Warren Buffet’s taxes, however, I’m sure that his 17% far exceeds the 37% paid by his employees in actual dollars.

      • 0 avatar
        Waterloo

        I have had difficulty with Warren Buffet’s statement that he pays 17% tax vs. 37% for his employees. Can’t a lot of that discrepency be explained by his type of income vs. theirs? Salaries are taxed differently, and a lot higher, than capital gains. I assume most of a man like Buffet’s income would come from capital gains vs. a salary. Just wondering.

      • 0 avatar
        Astigmatism

        A couple of quick points for the sake of the discussion:

        1) The Wall Street Journal had an editorial in April that claimed that “the entire taxable income of everyone earning over $100,000 in 2008 was about $1.582 trillion. Even if all these Americans — most of whom are far from wealthy — were taxed at 100%, it wouldn’t cover Mr. Obama’s deficit for this year.” They later issued a correction, noting that the correct figure is $3.4 trillion, more than double this year’s deficit. How this breaks down for people earning over $250,000, I have no idea.

        2) Warren Buffett specifically advocated raising taxes only on income over $1 million, which is not middle-class, no matter where you are in the country; he also called for a higher bracket for income over $10 million. He never said anything about increasing taxes on “100-200k per year”. He actually specifically said he’d “leave rates for 99.7 percent of taxpayers unchanged,” which would certainly cover that group.

        You can argue about whether those businessmen making their first (or tenth) million are being unfairly targeted, but let’s at least play with the same set of facts.

    • 0 avatar
      Chicago Dude

      The problem, as far as I see it, is that we continue to define wealthy/rich as making 100-200k per year. In any large American metro area, every middle class dual income family is in that range. This isn’t the 1970s any more. Inflation…

      We definitely need to raise taxes on the wealthy, but we need to actually define the wealthy first. And while we are at it, fix the AMT and make it automatically adjust for inflation.

      If you ask me, the actual wealthy people do their best to perpetuate the myth of the 100-200k cutoff – because then the middle class will fight on their behalf.

      • 0 avatar
        aspade

        There’s very little opposition to higher taxes from the plutocrats in this country. The Soroses, Gateses, Buffets, Bloombergs, Corzines, etc.

        Because the higher taxes they are talking about are higher marginal rates. Which people with 9 and 10 figure holdings don’t pay.

        Everyone read that Warren Buffett paid 17% on his taxable income. That rate isn’t important. What’s important is he paid 7 million dollars. One of the richest men in the world with something like 40 billion dollars in investments claims taxable income of 40 million bucks. In a recovery year when any moron could have made 10% simply buying the indexes and keeping your hands off.

        The people who do pay those rates at face value are the businessmen who just made their 7th figure and are working on their 8th.

        The men who might compete with those plutocrats.

      • 0 avatar
        slance66

        Very true. One major difference between the USA and say, the Netherlands, is that the cost of living in some places, NY, Boston, SF Bay area, etc. can be as much as 4-5 times what it is in other areas. $200k in rural Arkansas might well be rich. If you’re lucky, it gets you a one bedroom apartment in Manhattan, with no car. Here in metro Boston, $200k is definitely not “rich”. So whatever threshold is established, “rich” needs to mean rich even in the most expensive places in America.

        Now the sober truth. Even if you taxed those making $250k or more at 100% it doesn’t begin to put a dent in the deficit. There just aren’t enough of them.

        2008 data from the IRS: The top-earning 5 percent of taxpayers (AGI over $159,619), however, still paid far more than the bottom 95 percent. The top 5 percent earned 34.7 percent of the nation’s adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes.

  • avatar
    gslippy

    Asking Ferrari Chairman Luca DeMontezemolo to share his thoughts on how governments should overcome their budget crises is like asking Lady Gaga what we should do about the US space program – although they may have an opinion, neither is qualified to answer authoritatively. However, each one could meaningfully comment about the auto and entertainment industries, respectively.

    Most celebrity opinions should be kept to themselves; giving them a stage only helps to spread misinformation. It’s the rare celebrity who declines to comment on politics/business/social issues. But there are some – both liberal and conservative – who have become personally involved in one issue or another and CAN speak with first-hand knowledge of the subject.

  • avatar
    Jellodyne

    Wait until the right wing talk radio circuit hears about this. Half of the blue collar working class in this country will be so angry they’ll boycott Ferrari.

  • avatar
    Xeranar

    This article is a false dichotomy because it places “class warfare” which isn’t by definition a bad thing against a non-statement. By even saying “we report you decide” they reinforce their attempt to be neutral when already they’ve slanted the argument into a right-wing false dichotomy. So you’re either supporting class warfare (which by taxing the wealthy is the exact opposite of the meaning) or you’re making a neutral statement.

    If anything the wealthiest 2% of the western world holds more value than the bottom 2/3rds. They have gotten successful by using the bottom 2/3rds as their support base. Capitalism is a pyramid with a few at the top. So in order to lessen the strain on the pyramid those at the very top have to pay to try and balloon out the pyramid into a diamond shape. Hence where the “middle” class comes from. The problem is the middle-class as we know it in the US covers people from 20K a year income upwards to 250K a year. It’s an unrealistic group, proportionally the family income in the US is 50K (median) so once you go beyond 25K one way or the other you’ve reached lower class (25K and less) and upper class (75K and more) we subdivide the upper class though to give upper middle and upper class because arguably there is a slight difference between the 75K-200K group and the 200K+ group.

    But I digress, the article is a bad joke in the worst way. Learn your history and stop living in some libertarian dream.

  • avatar
    Philosophil

    That’s not class warfare.

    I realize this is difficult, but I’d like to see the quote in its larger context.

    In general I see no problem with a claim like that as long as he includes himself in the general category of people to which he’s referring.

  • avatar
    mikey

    As a Canadian,and a retired UAW/CAW member, I’ve listened to the “rob from the rich give to the poor” rhetoric most of my life.

    Those higher up on the socio, economic,educational spectrum,refer to it as “redistrubution of wealth”

    Great…It all depends on how you define wealth.

    A retired auto worker,and a retired lower middle management banker,are by some standards considered wealthy.

    Then there is the retired buisness owner with a seven figure portfolio. Yeah…and the same dude declares a 30k income.

    Whose rich? Whose poor?

  • avatar

    Luca’s concerned about the middle class because it’s the middle class that buys all that Ferrari branded merchandise. Their deal with Fila apparel generates billions in revenue to the two companies. The old man used to sell road cars in order to go racing, now they go racing and sell road cars to in order to sell you some red sneakers.

  • avatar
    SKUSA_boy

    Who else are they going to tax if they don’t tax the rich? Nobody else has any money left.

  • avatar
    WRohrl

    “If you’ve got a dollar and you spend 29 cents on a loaf of bread, you’ve got 71 cents left; But if you’ve got seventeen grand and you spend 29 cents on a loaf of bread, you’ve still got seventeen grand. There’s a math lesson for you.”
    — Steve Martin

  • avatar
    Type57SC

    Maurice Levy’s oped in the wsj was a little more balanced and unfiltered. He basically said tax rich more and cut welfare programs at the same time. shared sacrifice. As was the bettencourt article. this reporter probably edited for “flare”.

    http://online.wsj.com/article/SB10001424053111904279004576526712217102264.html

  • avatar
    L'avventura

    First off, I would be careful of stating that because Luca di Montezemolo said it was the riches duty to pay more taxes, that it automatically becomes “Ferrari sez”. Montezemolo has long been an independent and exceedingly vocal figure.

    Let’s also keep in mind, Montezemolo has political ambitions. The context of his comments are obviously in his long-time operatic criticism of Berlesconi and to score some points with the proletarians by proposing a wealth tax. Not to mention an attempt to ride the band-wagon of recent commentary by Buffet and Liliane Bettencourt (that rich L’Oréal lady).

  • avatar
    stuntmonkey

    The straw-man argument of “Tax the Rich” can be side stepped with two letters… “er”. The issue as everyone has pointed out, is not one of philosophy, but one of definition. I’ve often thought that it would be more feasible with taxation followed a more smooth increasing curve with income… i.e., reduce dis-incentive points. but coming back to Ferrari’s… the key economic point about luxuries is that they detract from charitable giving. If you buy a Ferrari, the excess money that you spend over a car that does the same thing for a lower price is money that could have gone towards charitable giving rather than towards the elevation of one’[s status. This societal ‘wastefulness’ is reflected by the precipitous depreciation that all super cars experience in the first year… the drop in value almost represents the money that the owner values for his/her social standing that others don’t share.

  • avatar
    getacargetacheck

    The income tax rates of the US rich (and upper middle class) have never been lower than they are today. Income and wealth disparity has not been this great since the Great Depression. Taxing the rich is long overdue. Let’s end the pointless overseas wars too — that should go a long way towards eliminating deficits.

  • avatar
    DC Bruce

    It’s hard to know where to begin with this. First, in the U.S., what has happened is that the incomes of the very top 1/2% have grown spectacularly. To get into that bracket, your income has to be well over $300K. Those are the people who buy overpriced, expensive toys like Ferraris. So, its not surprising that, in a moment of candor, someone associated with the production of such goods might be tempted to say that his customers could afford to pay more taxes.

    BUT, taxing people’s margin income over $500,000 at 100% (i.e. taking all of it) would not materially affect the federal deficit or reduce the tax burden on the rest of us.

    Secondly, we have experience with high marginal rates; until the Kennedy tax cuts of, IIRC 1963, the top marginal rate in the U.S. was 90%. At both the federal and the state level, lowering marginal rates has generated more total tax receipts, and raising marginal rates has generated less.

    The “class warfare” epithet is justified because the politicians who say “tax the rich more” know these facts (and they also know that hitting the tax where real money is, incomes between $100K and $250K hits people who are not rich but who live in expensive places like metro NYC, Washington, LA, etc.). But they do it anyway, because it is red meat for their constituents and it gets them votes.

    As for Warren Buffet, most of his income is dividends and capital gains, which are taxed at a lower rate than salary. If he thinks he has too much money, he should give more away.

    Notice I haven’t said anything about “trickle down” but there’s that too. If people stop buying Ferraris or yachts or whatever, then the people who make such products won’t be doing that any more. And, while we’re at it, people who pay to attend live opera, live theater (other than NY tourists who have “see a Broadway show” on their 2Do lists), the symphony or buy new paintings are pretty much rich, too.

    I know: the government should pay for artists to live. That’s great, then we’ll have endless arguments about whether someone’s tax dollars should be used to pay a guy who takes a color photography of a crucifix in a jar of urine and hangs it on the wall at an art exhibition.

  • avatar
    tankinbeans

    I’m not here to get political because I don’t care enough about either side to have a dog in the fight, but I always get frustrated I read about a hypothetical tax bracket of 99% and people say, “how would you feel if you only brought home 1% of your income…” Income tax 101 says it would not happen that way because these are marginal rates. I am by no means an expert, but I did pay attention when they were talking about tax rates.

    Just to keep things in nice round numbers. Say we have a 10% bracket, a 15% bracket, a 25% bracket, and a 30% bracket.

    We’ll keep the income numbers round so that it’s easier to understand.

    10% tax on income up to $1000

    $1000 * 10% = $100

    15% on income between $1001 – 2000

    $999 * 15% = $149.85

    25% on income between $2001 – 3000

    $999 * 25% = $249.75

    30% on income between $3001 – 4000

    $999 * 30% = $299.70

    Total tax on $4000 of income = $799.30

    Total percantage of money taken in taxes = $799.30/$4000 = 19.98%

    I know that I have grossly oversimplified this, but I had to register my frustration about this little point.

    Like I said, I’m not trying to take political sides here as I don’t care about either party one way or the other. Voting time always amounts to choosing the lesser of two evils and which person’s lies are least offensive.

  • avatar
    cackalacka

    Not to delve too deeply into the works of Andres Serrano, Warren Buffet’s salary, or healthcare, I will make the following observation:

    Over the past ten years the two types of cars I have seen considerably more of (over the previous 10) are:

    - Supercars
    - Beaters held together with bondo/duct tape

    The nation/economy would be/reflect a better place if the distribution/condition of the cars would return to a more normal distribution.

  • avatar
    burritolikethesun

    Took the world’s biggest man-made calamity to sort this out last time. This time we have way bigger bombs.

  • avatar
    stationwagon

    tax the rich, end the wars, give women on government assistance a depo-provera shot every three months, tax churches with giftshops eg. Megachurches, gradually end social security retirement benefits, before it ends raise the $90,0000 income cap taxable by social security. all pensions should only be paid for up to 15 years after retirement. Use and hire more people to work as government employees, rather than shelling out billions to contractors. Strengthen clean air and clean water regulations, stop appointing former CEO’s and lobbyist to the heads of agencies especially regulatory agencies. Term limits of one term. Encourage Nuclear power plants, END the department of homeland security and department of education. End the h1-b visa program, and End subsidies. A progressive tax system that has income brackets and, only one deduction allowing to pay no taxes if over %50 of your assets have been destroyed in a natural disaster and you are worth less than $800,000.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India