Why a wealth tax won’t raise revenue…

[Mick]

…according to the National Review, anyway.

https://www.nationalreview.com/2020/11/why-a-wealth-tax-wont-raise-revenues-or-reduce-inequality/?utm_source=Sailthru&utm_medium=email&utm_campaign=NR%20Daily%20Monday%20through%20Friday%202020-11-03&utm_term=NRDaily-Smart

Summary of reasons it won’t work:

1. there isn’t any wealth inequality
2. Difficult to assess wealth
3. Europe’s experiences with wealth taxes yielded very little.
4. Costly to administer.
5. Easily circumvented.
6. Too many admin problems.
7. Mobility of capital would cause people to flee.
8. Taxing the wealthy really means taxing the elderly.
9. Wealth tax would depress demand
10. Wealth tax would depress asset prices
11. Goal of taxing wealth is unclear
12. Looks to the future more than the past

Basically, adopting a wealth tax based on dubious assumptions and narratives about inequality would be harmful to economic growth, raise few revenues, have little impact on inequality, and contradict the conduct of monetary policy. A wealth tax penalizes savings and encourages consumption, even frivolous spending, over investment. It says society prizes redistribution ahead of growth and equity over efficiency, the wrong signals to send when a decade of sub-par growth was capped by the worst economic downturn since the Great Depression.

[Genuine Realist]

I’ve kinda given up on this crusade, until I can figure someway out of the money dilemma. Piketty estimates there are six to eight times productive wealth as there is ibcone. But there are hundreds, maybe thousands, of times of money equivalents – glamor stocks, for one, leveraged debt instruments, stock options, collectible, etc. Coping with that is way beyond my expertise. Is a puzzlement.

But as to the NR article, two points.

First, the concept of a wealth tax as a surtax, particularly at the State level, won’t work at all. What I have been advocating is changing the annual tax base from income to wealth. That does work, if the money problem can be solved.

Second, I’ll deal with all the complexity and practicality objections the short way rather than the long. Whatever the complexity, it’s a helluva lot simpler than an income tax. You’re the accountant. Which is easier, a P/L or balance sheet? Doing an annusl wealth tax is a snap. No computation of profit or loss on transactions. No involbed determination of basis. No issues with annualization. No straddle gimmicks.

 

Just assess your assets. Not that tough. Lenders do it, The IRS requires it in estate tax returns. There are valuation methods for just about every asset.

Then net liabilities against the asset base, and there you are. I did sample computations on one of the blog posts.

The real problem that NR has – and George Soros, and Barbara Streisand, and all of the others – this is one issue on which they all join hands – is  that this is one progressive tax that actually IS progressive. Horrible.

I wouldn't give you two cents for all your fancy rules if, behind them, they didn't have a little bit of plain, ordinary, everyday kindness - yeah, and a little looking out for the other fella, too.

[rjnwmill]

“I’ve kinda given up on this crusade, until I can figure someway out of the money dilemma. Piketty estimates there are six to eight times productive wealth as there is ibcone. But there are hundreds, maybe thousands, of times of money equivalents – glamor stocks, for one, leveraged debt instruments, stock options, collectible, etc. Coping with that is way beyond my expertise. Is a puzzlement.”

Amusing, advocate aggressively, publish a plethora of scholarly blogs and then go Emily Lutella.

Here's a toast with one last pour, may it last forever and a minute more;
Good fortune seems to you have sung, to live and love way past long

[Mick]

GR is right.  A wealth tax won’t happen.  Too many vested interests to prevent it.

A friend of mine was once talking with the football player Lamichael James about, of all things, hair cuts.  James had an off-kilter cut, and was lamenting the fact that he’d used a new stylist who was not very good.  James said “That’s one thing that cuts across race, creed, gender, religion and sexual preference…sitting in that chair and knowing you’ll have to hide for a month.”

A new wealth tax that hits at the wealthy would cut across Progressives, Libertarians, moderates, Conservatives, Democrats, Greens and Republicans alike.  They will all — all — be against it.

[Author]

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