Wealth taxes are a hot topic today.
https://www.washingtonexaminer.com/opinion/how-a-wealth-tax-would-stifle-minority-communities
Interest is hitting all time highs as a potential solution to “inequality”.
There are, however, several strong arguments against wealth taxes…
1
Disparities are natural.
Someone will always be richer.
Someone will always live longer…
Policy should never punish people for good behavior.
For example, if people are healthier, they should be rewarded, not hit with punishing mandatory penalties for not buying insurances.
Thank God, these schemes were eliminated.
https://www.healthcare.gov/health-coverage-exemptions/exemptions-from-the-fee/
Similarly, innovation and productivity should be rewarded, not punished.
2
A foundational component of our economy is one that encourages investing into publicly traded assets.
Meaning, by dumping our retirement accounts into publicly traded companies, the majority owners of the companies benefit the most. That’s in part why they took the company public.
Notice that the national Gini Coefficient began rising with perfect alignment and proportionate to the approval and adoption of the 401k plan.
https://fred.stlouisfed.org/series/GINIALLRF
Wealth inequalities may be more a natural result and function of the American retirement model, than some corrupt and evil plan to deny resources to poor people.
Wealth tax proposals today in effect aim to punish people for taking their company public or investing into innovators who took their company public.
At this rate, they’re better off banning publicly traded companies!
3
Heard of Henry???
High earner not rich yet.
The problem with the wealth tax is too often proposals are actually income taxes, and don’t touch wealth at all.
Income taxes on higher income earners typically doesn’t account for the debt that must be repaid, such as student loans.
Such income tax schemes obstruct otherwise productive people from attaining any wealth.
Of course if the actual goal is merely to just boost Treasury revenues, then lenient considerations given to student borrowers — such as the PSLF program — will gradually dissipate eventually.
4
Even with the extra few hundred billion dollars in tax revenue, there’s still no proposed mechanism to address the racial unemployment gap.
The racial unemployment and underemployment gap is the most significant contributor to the 40:1 racial wealth gap.
This was largely exacerbated and uncorrected by choice in recent years.
With a 50% or even greater wealth tax, there will still be inequality.
Racial employment discrimination doesn’t suddenly become investigated more actively just because there’s a wealth tax.
Civil Rights Act of 1866 will still be violated by careless crooks.
Wealth taxes don’t change the basis upon which money is commonly distributed in the American economy…
Wherein, there’s a tremendous body of evidence that it is primarily distributed by race, and it’s even a racial construct and byproduct of race.
5
By nature, taxation schemes persuade wealthy people to take on less responsibility to care for others because “my taxes cover that”.
Perhaps, the wealth tax is a distraction from policies and programs that actually work to eliminate disparities in household wealth.
Herein, for those seeking a solution to inequality….
Most income in America is “earned” income. Less is unearned.
As such, a “job” is the fundamental structural mechanism for how most people in this country begin to acquire wealth.
Consider economic and psychological incentives to encourage high net worth people and large employers to hire applicants based on several factors….
A
Student loan default status, and amount of debt.
This can show expertise in an area, while default status can signal quickly who has been denied the opportunity to participate in the American economy.
This data is available at the department of education.
B
Consider income over the last two or three years.
Sort the applicants by lowest income to identify again who has been denied the opportunity to participate in the American economy…
This data is available at the IRS.
C
Identify who has applied for the largest number of jobs.
Government databases can easily be accessed to acquire this information too, such as the records that are stored by OPM who manages usajobs website.
In effect, through this data integration technology program, a job preference would be given to people who are highly trained, seek to use their skills, but have been shut out from the economy despite numerous efforts to participate in it.
Income and wealth disparities are natural.
Being denied thousands of job opportunities for years despite attaining advanced education and experience IS NOT natural.
Candidates might be a little distracted…
There’s an 8x unemployment gap by race in places like DC.
These disparities are worse for economically disadvantaged college graduates who are not Asian.
Wealth tax proposals do nothing to help most economically disadvantaged families secure employment with wages having parity to white and Asian Americans with similar levels of education.
Executive branch, legislative branch, and judicial branch leadership have a unique opportunity to coordinate and improve outcomes for all Americans… But it will not come through wealth taxes.
Don’t get distracted.