“Wealth tax” is not a small scale reform-its part of a larger assault on inequality

(Emmanuel, E. Morris Cox Professor of Economics and Director of the Center for Equitable Growth at the University of California, Berkeley and Gabriel, Assistant Professor of Economics at the University of California, Berkeley https://www.bostonreview.net/forum_response/emmanuel-saez-gabriel-zucman-final-response/ , 4-8)

In the twentieth century, the United States pioneered the sharply progressive, quasi-confiscatory taxation of high incomes. From 1930 to 1980, the top marginal income tax rate averaged 78 percent; it exceeded 90 percent in the 1950s and early 1960s. The goal of this policy was not to generate government revenues. It was to reduce the concentration of pre-tax income. It was to change how markets work: to discourage the various forms of rent extraction that are associated with unfettered markets and to suppress the incentives for corporate executives, for instance, to pay themselves sky-high salaries. Dean Baker worries that a wealth tax would not change the way that markets work—that it would not affect the distribution of market income. In fact, we view the wealth tax as a way to reconnect with and modernize the U.S. tradition of using the tax system to regulate markets and reduce pre-tax inequality. Wealth is power: the power to influence markets, government policies, the political process, the prevailing ideology. Reducing wealth inequality would reduce the concentration of power. It would contribute to equalizing economic and political power, which would contribute to more equal market outcomes. A wealth tax, if progressive enough, would be much more than yet another tax-and-spend policy. From that perspective, we fully agree with the insightful responses by Bryce Covert, Martin O’Neill, Stuart White, and Felicia Wong, who all stress the need to go beyond ex post redistribution and stress how the wealth tax could contribute to that goal. Of course, a wealth tax is not enough. It would not, by itself, address the rise of inequality. Many other policies—such as patent regulation, worker representation on company boards, a more equal access to higher education, and campaign finance reform, among others—have a critical role to play to equalize market outcomes. The wealth tax is not a silver bullet; it is only part of the policy response. But we believe it is an important part, because it targets the stock of wealth directly—and is thus the powerful fiscal tool that governments have at their disposal.