San Diego Union-Tribune (Sunday)
IS A WEALTH TAX NEEDED?
Sen. Elizabeth Warren and others argue COVID has created massive inequality and it is needed to balance the scales.
ECONOMISTS NO
Wealth taxes are neither simple to administer nor to collect. Individuals targeted by this proposal have numerous investments and asset holdings for which assigning a value is difficult. These might include unique real estate properties and privately held businesses, all of which would need to be valued annually. Additional Internal Revenue Service resources would be required to audit the tax returns of wealthy individuals. Less cumbersome approaches exist to collect more in taxes from the super-wealthy.
YES
The downturn in the economy caused by the pandemic has particularly hurt those at the lower end of the income distribution, as their jobs were the ones most affected. At the same time, most of those at the upper end were able to keep their jobs and also likely benefited from the surge in the stock market. A wealth tax would help rebalance the economy by generating tax revenue that could be used for programs to help those most negatively affected.
YES
It makes little sense to offer the COVID-19 relief package, and then ask these same recipients to assume the burden of repayment. Given the huge cost of funding government programs, it is worthwhile to review and explore taxing those who can better absorb the cost, and who have benefited greatly from their lives in the USA. A wealth tax is one idea, but so would be an increase in capital gains tax, addressing loopholes and eliminating the corporate tax breaks passed in the Trump era.
NO
Alternative minimum taxes for those who are able to use tax shields and faux losses, are a good idea, as are significant estate taxes, which nail you after you’re gone, but not annual wealth taxes on those who have created some of the most productive jobs in our country. While some superwealthy icons may hoard their wealth, others like Bill Gates spend it on many worthwhile causes. Politicians should not be allowed to intercept such decisions or redirect to their chosen causes.
EXECUTIVES YES
We are seeing huge gains in personal wealth for a select few Americans. Wealth that is far beyond “passing something onto their children.” When we discuss individuals worth billions of dollars we are far from stifling hard work and creativity. Instead, it is excessive wealth that should be shared with the less fortunate. With huge deficit spending due to the pandemic, now is the opportune time to implement the Warren Ultra Millionaire Tax.
NO
Most European countries that had wealth taxes have abandoned it since they raised less revenue compared to the cost and were easily avoided by millionaires and billionaires. At that income level, you can find and exploit loopholes or leave the country. We are a free market economy and by taxing both assets and income, we could harm our economy by disincentivizing investments and innovation. If a wealth tax is implemented, what stops the threshold from lowering? The middle class will likely be the ones feeling the squeeze thus widening the income gap further.
YES
Wealth taxes only impact the uberwealthy. What is the difference between a lifestyle with $40 million and $400 million? Or $4 billion? Bigger vacation homes and yachts? Nothing substantive. Once an individual has amassed substantial wealth, the interest alone supports generations (that did nothing to earn it). Those that had the opportunity to earn a fortune should feel obliged to help enable others to do the same. No doubt wealth taxes are hard to administer but can enact economic justice.
NO
Even Janet Yellen has proclaimed this tax idea as unworkable. It taxes yet unrealized capital gains, creates enforcement nightmares for the IRS, and will eventually create a police state to enforce it. Of the 15 countries that have tried wealth taxes, 11 have abandoned them. It will grow into much more than a tax on ultra-millionaires, just watch. In the first two decades, the $50 million becomes $5 million, then $500,000. Dead on arrival.