I hope observers will look back on the wealth tax debate as an extremely clever way of broadening the tax reform Overton window. If so, it could be very valuable, as much needs to be done to address stagnant middle class wages and the excess political power of moneyed interests.
There may also be some areas—particularly involving corporations—where taxes based on market value could usefully replace or backstop income tax approaches.
The right progressive agenda around money and power involves political reform directed at changing campaign finance rules, limiting lobbying and revolving-door activities.
One proposal: requiring high-ranking federal officials from the President on down to file financial disclosure forms for 3 years after they leave office.
Correct approach also involves leveling the playing field for union organizing and stepping up business regulation especially in the areas of antitrust and consumer protection.
Government should also scale back its advocacy abroad of commercial interests largely unrelated to US jobs. And it should limit programs where businesses get privileged access to government officials by contributing to worthy causes.
What about raising revenue? Controlling avoidance and closing loopholes and shelters could raise more than Saez and @gabriel_zucman claim for a wealth tax and much more than it would in fact raise.
The agenda would start w beefed-up tax enforcement tilted towards high-income. Next would be capital gains reform to include constructive realization at death & on charitable gifts, raising rates, elimination of carried interest & tax-free like kind exchanges of real estate, etc
Further steps would include raising the corporate rate to 27 percent and repealing various shelters legislated in the Trump tax bill. Full taxation of dividends, and estate tax reform would also raise needed revenue.
I think the case for a well-designed financial transactions tax like that in place in Hong Kong is stronger than the case for a wealth tax. It should be seriously considered.
Finally the politics of the wealth tax seem problematic at multiple levels. Successful progressive policies such as those in place in Northern Europe rely not on soaking the rich but on broadly levied taxes like the VAT that support a state that is generous to the middle class.
Great progressive achievements like Social Security and Medicare happened because seeds were planted that grew over long time periods and were implemented thoughtfully.
Premising a progressive agenda on a financing source that is untried and likely to be declared unconstitutional is risking what could be a great window of opportunity.
There are better ways to spur increases in middle class wages, to avoid the recession that is more likely than not in the next two years, and to meet the Chinese economic challenge than a narrow focus on wealth taxation.
