Andrew Coyne: What is the problem to which creating a wealth tax is a solution?

National Post
Democratic presidential nomination candidate Elizabeth Warren National Post | James Alexander Michie

Democratic presidential nomination candidate Elizabeth Warren proposes a two per cent annual tax on fortunes over US$50 million, and three per cent over $1 billion. Sean Rayford/Getty Images

Currently, several questions have been established regarding the tax on wealth and one of them stands out: What is the problem for which creating a tax on wealth is a solution? In response, it has been said that perhaps the argument is less than the rich are too rich that the government is too poor.

It is also considered that each policy disaster should be reviewed at least every 30 years or so. And it is that the debates that were thought for a long time were solved, just as deficits, inflation, and socialism are revived, as the memories vanish, the original participants die and a new generation takes the same discredited ideas, without the real experience of its consequences.

In this way, it is established that the fashion of taxes on wealth reappears there. Once common, in the last decades the world has been getting rid of them constantly. Only four OECD countries continue to impose a tax on wealth, compared to almost 20 a generation ago. Now they are back, at least in the dreams of leftist politicians.

An attraction for the wealth tax

Noteworthy is the attraction of a wealth tax to politicians, if not to the billionaires, which is obvious. The stock of wealth in a country is typically many multiples of the income stream; being its concentration in a few hands is equally greater. The top 1% earns approximately 20% of US revenue but controls 40% of its wealth.

Now, it is important to mention how the debate on inequality has changed in recent years. Where the problem of poverty, whose evils are evident, the “problem” of great wealth; from the gap between the poor and the rest of us to the gap between the rest of us and the rich, or even between the rich and the very rich.

In this way, it is considered that the argument is possibly less than that the rich are too rich of what is that the government is too poor. In this way, it could be argued that the government should spend more on certain things, especially in the United States. It does not follow that you have to increase taxes to do so. Many good new expenses could be financed by cutting back on old expenses.

That being the case, if we already have a type of wealth tax, in the form of municipal property taxes, and they are a notorious disaster. They do not conform to any of the usual principles of good taxation, nor are they simple, efficient or fair.

Source: Andrew Coyne | National Post

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