Thursday, October 22, 2020
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.