Paul L. Caron

Thursday, October 22, 2020

What’s Wrong With A Wealth Tax

Allison Schrager & Beth Akers (Manhattan Institute), What’s Wrong with a Wealth Tax:

In the coming months, Americans can expect calls to tax the wealth of the richest citizens. There are four oft-cited justifications for such a measure: inequality is rising, and there is a need to restore fairness; more revenue is necessary to bring exploding deficits under control, and taxing the wealthy is the least harmful way to do so; extreme wealth disparities harm economic growth; and the rich use their wealth to rig the political system, so democracy requires leveling the playing field.

Wealth inequality is indeed increasing, the country does need more tax revenue, and special interests can get government favors. But none of these reasons justifies a wealth tax, which could damage the economy while raising little revenue. Instead, a better solution for raising additional revenue would be to remove the many existing distortions in the tax system.

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Any attempt to justify raising taxes to specifically control "exploding deficits" ignores the spending side of that equation. You can only gobble up the pie so much until the government share is half or more, which no industrialized country except maybe one has been able to manage, while growth suffers. Goverment taxation does far more to discourage growth than all the wealth inequality in America.

Posted by: MM Classic | Oct 23, 2020 7:43:52 PM

What's wrong is probably the unconstitutionality...

Posted by: Anon | Oct 22, 2020 7:15:37 PM