Posted on 08/20/2020 7:45:38 AM PDT by Kaslin
Politicians are renowned for their shortsightedness. During the post-war period, for example, Republicans have very publicly opposed most tax increases. I like small government, so I'm good with that. Where I part ways with the Grand Old Party is with its failure to oppose big spending that's funded with debt, meaning future tax hikes.
Their lack of spending restraint, also encouraged by Democrats, is inconsistent and means that a new source of government revenue is likely in our future. And, if that is the case, it may very well be a wealth tax.
Support for taxing wealth (as distinct from income) has been picking up momentum in the United States as progressives have argued that the tax is an effective way to reduce inequality. We frequently heard calls for tax hikes on the rich like those during the Democratic presidential primary season when both Sens. Bernie Sanders and Elizabeth Warren prominently proposed such a wealth tax. And while Joe Biden hasn't endorsed a wealth tax, his spending plan is so vast that it's difficult to see how it won't be on his agenda soon. Always eager to demonstrate its progressive cred, California is also close to adopting such a tax, which would make that state the first in the nation to do so.
A wealth tax has many problems. While it makes for great "soak the rich" soundbites, in reality, it's ineffective at reducing inequality. What wealth taxes do best is to disrupt the accumulation of capital. Since most wealth is invested and provides capital for innovators and producers to draw upon -- and for workers to work with -- all Americans would suffer from a wealth tax.
In a recent paper published by the Center for Freedom and Prosperity, economists John Diamond and George Zodrow of Rice University's Baker Institute added to the extensive evidence on wealth-taxation's negative effects.
The authors simulated the Warren wealth tax's economic effects and how that impacts the lifetime earnings of different income groups. They estimate that long-run GDP would be 2.7% lower than it would be without a wealth tax. They also found declines in lifetime wealth from the upper to lower-middle classes.
To gauge the wealth tax's impact, Diamond and Zodrow had to make assumptions about how the money would be used. Paying down the national debt, for instance, has different implications for capital allocation than beefing up welfare programs. Since tax proponents tell us they prefer to do the latter, the simulation assumes that wealth tax revenues would be used for redistribution in similar proportions to current spending. The authors thus found small increases in lifetime per-household wealth for bottom income earners, ranging from $100 to $500.
These very small "benefits" (to use the term rather loosely) come at very high costs. Initial losses in average household income would amount to about $2,500.
Europe has traditionally shown a greater affinity for taxing wealth than the United States. But even in Europe, the administrative difficulties, low level of revenue collection and utter lack of impact on inequality have led many nations to abandon wealth taxation. Whereas 15 European countries have implemented wealth taxation, only three have stuck with it.
Nations like France, which dropped its wealth tax in 2018, learned the hard way that taxpayers don't sit idly by while the fruits of their life's labor are looted. They go elsewhere.
The wealthy are already fleeing California as it continues to increase its fiscal reliance on a tiny number of highly successful individuals. This trend cannot continue, and to quote economist Herbert Stein, "If something cannot go on forever, it will stop."
It's bad enough for legislators in the state with the nation's largest economy to hit the accelerator as they approach a cliff. It would be even more foolish for the rest of the nation to follow suit.
So, Republicans, if you really believe in lower taxes, think of that next time you feel generous with taxpayers' money.
...as more and more voters are losers with no liquidable or real assets to their name. Maybe they're career/generational welfare deadbeats. Maybe they're men still living at home in mom's basement.
It was a huge mistake to allow people to vote who are slothful, irresponsible, and have nothing at stake. Such dregs as that will vote for whatever candidate gives them more free stuff.
And that sums up perfectly our political scene.
Someone had to research that?
If they tax wealth, the wealthy will spend it. For a short time there will be an economic boom, but it will die down and we’ll be back at round 2 with a lowered threshold and the process rep will repeat until there is no more wealth.
Stupid article. A Wealth Tax is unconstitutional. No way do they get an amendment passed.
It is impossible to tax wealth, once accrued. You can tax consumption, you can tax income, it is even possible to tax tangible means of production. Any attempt to tax wealth only results in the diminishing of that “stash”, with no meaningful revenue being collected for the treasuries of the taxing authority. Wealth is only generated by the mobility of money, and anything that stops that mobility, simply means the money disappears from circulation.
It matters not that wealth is measured in bitcoin, shekels, dollars, gold, silver, or wampum, the same economics hold forth. Gresham’s Law is a monetary principle stating that “bad money drives out good”. Money, and the wealth that it measures, is only a medium that people agree upon, and means that something is worth only as much as somebody else is willing to pay for it. In the daily commerce, this means some pay too much for too little, while others pay very little for a great deal. But in the end “There ain’t no such thing as a free lunch”, often reduced to its acronym TANSTAAFL.
An economy cannot be dictated for more than a very short period of time, then either it breaks down into a black market, or simple barter, and for that reason any form of command-and-control regime, of which Socialism is but one variation, eventually becomes a militaristic dictatorship, unproductive and a parasite on its neighbors, from which it steals or goes to war with.
Either way ends in chaos.
Lol. As if more than two in the Congress are ever thinking past the next election. They only care about the future of the next term. They will always punt the debt.
And the ones who might care are surrounded by the “expert economists” that push Keynes destructive theories.
Someone was interviewing Barak Obama and asked, since data repeatedly shows that raising taxes on the wealthy leads to less tax revenue, why are you proposing that? He responded, “at some point, it’s not about the money. It’s about fairness.”
A WEALTH TAX IS SOCIALIST.
Most countries that had a wealth tax dropped it for this very reason. People snap up rental real estate instead of invest in things that grow like businesses.
California is in the process of passing such a wealth tax bill ,and, get this, it’s 10 year retroactive!
States can, the fed can’t. Also, I don’t believe states can past ex post facto laws.
I have no issue with taxing the crap out of say Zucker, Soros, and the executives of Google.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.