A Problem with a Wealth Tax

Elizabeth Warren has proposed a tax on wealth, and while many have already criticized this proposal, I want to suggest another problem. I begin by asking, Who will be hit hardest by this tax? Here I’m talking about those who are actually wealthy. I am sure that those who are not wealthy will be hit by this tax in indirect ways, and I am also sure that no matter what they now say about who will be taxed, almost certainly people lower down will end up being taxed as well, if not now, then in the future (since the numbers will not be indexed to inflation or whatever).

But never mind all that. Given the tax as stated, who among the wealthy will be hit hardest? I say the new rich will be hit harder than the old rich. The new rich (the nouveau riche) are less likely to know all the tricks of avoiding taxes that the old rich know. The old rich have been at this game for a long time, and they have hired the best accountants, know which politicians they can influence, and so on. The new rich are less likely to be good at playing this game, and so they will be hit harder than the old rich.

And this I say is unfair. It’s unfair because the new rich are people who were, not so long ago, poor or middle class or (at worst) upper-middle class. But they weren’t rich. They worked hard to get their wealth, and they will now feel it is being stolen from them. Or maybe they got lucky by winning the lottery. It’s the same thing: they spent time being way down the economic scale, and now when they’ve managed to escape, an annoying politician is going to steal it from them. Meanwhile, the old rich are those who inherited their money and have never had to work hard at all. They will get to keep their money because, as I said, they know all the tricks to thwart the politicians.

For those who think that somehow this tax is going to increase fairness, it probably won’t.

Comments

[Charles N. Steele]

You are exactly right. On paper, many of the rich don't even have most of their personal wealth - it's in non-profit entities like the Clinton Foundation. The anti-wealth tax bill will be designed to protect Rich Person Leftists. Tom Steyer uses "charitable donations" that promote climate policies that would benefit his solar power investments... THIS sort of wealth must be excepted, of course. I'm guessing the Charles Koch Foundation doesn't fall into that category, though.

Further, those who really are targeted are those who aspire to create wealth for themselves but don't have it. "If you succeed and earn a lot of income, we are taking it away from you." Warren's plan is evil and destructive.