Posted on 01/25/2023 5:40:41 AM PST by Red Badger
They think they are being clever. But they aren't.
This week, Democrats in states across America — Washington, California, and New York in particular — are proposing wealth taxes modeled after the federal wealth tax originally proposed by Sen. Elizabeth Warren (D-MA). These taxes are nothing like the taxes you are used to.
Instead of taxing a stream of income — the sensible, rational way to raise money for government, from available income streams — they focus on wealthy people and attempt to take a portion off the top of their overall net worth each year. They do not care whether or not any of that wealth is liquid — they just want to take away some of what rich people have.
Such taxes, if rich people are dumb enough to stay in such states and pay them, could force a lot of asset sales that otherwise wouldn't happen. After all, if you are only rich on paper (say, you own valuable land but little cash), you might have to sell a bunch of assets to pay such a tax.
But of course, most rich people (and note that roughly 80% of millionaires did not inherit anything) did not get rich by being stupid. When presented with a threat to their wealth, they react.
Wealth taxes don't work. We know this because they have been tried in at least a dozen European countries. In most cases, they have been repealed. The reason? Such taxes have proven to distort rich people's investment decisions and drive rich people to other countries without raising much money. They are also extremely difficult and expensive to administer. It takes a lot of time and effort to provide a valuation on the fortunes of people who own lots of stuff. And certain assets and investments can be volatile or especially hard to appraise.
France provides the most obvious example of a wealth tax gone wrong. Its wealth tax drove 42,000 millionaires to move to other countries. Ultimately, this destructive experiment in taxation chewed up so much of the country's tax base that it had to be repealed.
And just think: If it's that easy for French millionaires to move to entirely new countries to avoid an unnecessary expense like an annual wealth tax, how much easier will it be for affluent Americans just to move from one state to another? Unlike those French, the many multimillionaires in California, Washington, and New York won't even need passports or naturalization papers to relocate themselves to Nevada or Utah. What's more, the states that will never enact wealth taxes are often much nicer places to live than the ones that are considering them now. It's less than a five-hour drive from the homeless tent city of Seattle to beautiful, clean Coeur d'Alene, Idaho, where everyone is armed and state-funded agencies won't even try to trans your children behind your back.
For a multimillionaire or a billionaire, an annual wealth tax means that the sight-unseen purchase of a home in another state (Florida and Texas are popular choices) might pay for itself within a month or two.
But the impracticality of wealth taxes isn't even the strongest argument against them. The strongest argument is that the burden of proof that such a tax is needed or useful in any way is entirely on those who would impose it. And there is no rational basis for the Left's panicky and resentful feelings toward the affluent, which comprise the entire rationale for such taxes.
No, the rich are not gobbling up all of America's wealth. With the possible exception of Democratic politicians who miraculously become millionaires in office, the rich become rich by providing people with goods and services they want. You, dear reader, personally chose to help make someone ultrarich when you purchased that iPhone, that electric vehicle, or that popular chicken sandwich. You and all other consumers do this every day.
Meanwhile, as the number of millionaires and billionaires grows with the economy over the long run, the living standards of poorer and middle-income people continue to rise. In fact, when you include welfare and other transfer programs, the supposed statistical evidence for income inequality almost vanishes. And so does poverty.
Thank goodness free markets are making this happen all over the globe.
In the end, the Elizabeth Warrens of the world need to learn that envy and resentment are no basis for making tax policy. Warren has to let up with the resentment, grab herself a beer, and calm down.
These laws are also premised on the idea that they have the long arm ability to go into other states and tax the wealth of those expatriated Californians. But jurisdiction doesn’t work that way. If the person isn’t within the state or the property isn’t within the state, you don’t have jurisdiction over them.
But this will also have a very important effect to get people to avoid personal jurisdiction. No one with any wealth of any sort will enter these states who have these laws. No vacations, no business meetings, nothing.
Sensible and rational only if you want to create a bloated monstrosity with effectively unlimited scope, power, and cost.
Great example—the yacht building industry just moved a few miles offshore.
Billionaires own more than one home in different states—so it is trivial for them to close down the home in the high tax state—and replace it elsewhere at their convenience.
The computer/cell phone age has made location less and less import so it has become much easier to avoid high tax areas—and that trend will continue.
Of course the billionaires hire the best tax advisors on the planet to identify any loopholes that may exist—and those will be maximized by any billionaires who do stick around...
Sinple rule—you don’t get to become and stay a billionaire by paying high taxes!
Naturally, because they don’t want anyone else to become Uber wealthy.
The tax would discourage savings and investment, as it would reduce the incentive for individuals to accumulate wealth.
It would be seen as a disincentive for entrepreneurs and business owners, as it would reduce the potential rewards for their efforts and make it more difficult for them to accumulate wealth.
It would be seen as a form of double taxation, as the wealth being taxed would have already been subject to income and other taxes.
It would be seen as a form of redistribution of wealth, which would be seen as unjust as individuals should be free to keep the fruits of their labor.
It would be seen as a measure that could hinder the economy, since it would reduce the amount of capital available for investment and slow down economic growth.
It would be seen as a measure that could be difficult to implement, as it would be difficult to accurately assess the wealth of individuals and would likely require a large and costly bureaucracy to administer.
It would be seen as a way to make tons of money for dems to spend....................
Yet another dumb idea that has been floating around for decades.
At the very basic level, you cannot tax wealth that isn’t there. The RICH hire folks that pour through the tax code and figure out every single way possible to hide and protect their money from the feds.
Buffett is the perfect example. The Feds cannot touch his money.
So, all those liberal hipsters that want to tax the 1% don’t have a fiber in their brains that shows them how the tax code works. And what’s even better, the folks that they consider allies, the liberal billionaires, are some of the folks that have pressured their puppets in Congress to modify the tax code so they can hide their money.
Has anyone asked how imposing a wealth tax would actually works? Seems to me the sudden asset sales required to raise the funds to pay that tax will be a problem, as you need wealthy people to buy what you need to sell, but they also need to sell for the same reason. So asset values immediately drop.
Yes a wealth tax is a very dumb idea. Suppose you had very little income & were basically living on S.S. Also suppose that over the years you had acquired some property;small items, but worth whatever the government had it valued at. Would they try to tax it at maximum value, even if it took more than you had coming in to pay the tax? I would exclude real estate, because you would usually not be able to pay the taxes on that anyway in most states because of the property tax. Here’s another case in point & I saw this with my own eyes. There was a lady in my area trying to get a property tax exemption as she lived on that property. Apparently she had inherited it when her husband passed away & it may have been a rather valuable property. Now she could continue to live there, but only if she paid the taxes, which in her circumstances, may have been virtually impossible. No option there except to sell the property & then pay the inheritance taxes on that amount.
I recall the Recreational Vessel Fee 1991, which was required of all boats on waters accessable to the ocean or had a coast guard presence.
Very few paid it, and I steadfastly refused on principle. It was repealed after a single year due to non-compliance and public outrage.
There would be no “sudden” asset sales since billionaires have lots of ways to generate cash over time if they have a known tax liability.
Some of their assets such as art or other “hobbies” have international markets as well.
But—as a practical matter there will be very few wealthy folks who would ever pay such a tax.
They didn’t get wealthy by being sitting ducks for local tax officials.
On the nosey!
It hasn’t become a bill, has it.
Deep State will pick every pocket but its own.
i give her the benefit as just her first term, until she was schooled by the old boys.
once you are introduced to the bacon-wrapped shrimp club, it is hard to forget.
Gun control is unconstitutional, but the deep state totalitarians are constantly pushing it down our throats.
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