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I understand the spirit and appeal of a wealth tax. It makes sense that those who enjoy vast fortunes should pay back into the system, particularly given the concentrations of wealth in our winner-take-all economy. But the implementation would be impractical and problematic.
First, in many cases it’s hard to come to a proper value of assets. Intellectual property, goodwill, illiquid family businesses, and speculative investments may be tough to find comparables for.
Second, many of the truly wealthy would take giant steps to avoid an annual inventory of their assets to the government. This would include even adjusting their marital status and/or legal guardianship to divide assets among family members to fall below taxable thresholds.
Third, we would likely see significant capital flight. If you are worth $500 million would you spend $10 million a year and submit to an annual audit to maintain US citizenship? Or would you become a citizen elsewhere? That is not an easy question to answer.
Other countries have approached remedying the concentration of wealth through a value-added tax that taxes those who benefit most from and consume the most in our society. It is proven and it works.
One should pay equal attention to how the resources are spent. To me, the best use of resources would be to put them directly into citizens’ hands where it will do the most good. 👍
We should learn from other countries. Denmark, Finland, France, Germany, Iceland, Ireland, Italy, the Netherlands and Sweden all tried a wealth tax and then repealed it, mainly because of the implementation issues and that it did not generate as much revenue as projected.
