Wealth taxes like the aff won’t help inflation – and might actually create more deficits

But the revenue raised from taxes would have to go toward reducing the deficit, Young noted, not spending on government programs and projects. 

“If you spend those tax revenues from the rich on social programs or infrastructure, it won’t do anything to reduce inflation. If the tax doesn’t lead to less spending, it won’t help with inflation,” he said. 

President Joe Biden’s Inflation Reduction Act has provisions aimed at altering the tax code, Young pointed out. The act set  and a 1% tax on corporate stock buybacks. 

But Young doesn’t think these measures go far enough.

“It is clear that the inflation problem is more severe than we realized back in the summer,” he said. 

The minimum corporate tax, for example, would raise  according to preliminary estimates from the Penn Wharton Budget Model, he explained. 

“Remember that the” Young said. “So, the IRA was more of a balanced budget policy, rather than a big deficit-reducing inflation fighter.” 

To effectively fight inflation through a tax-based strategy, Young said you’d need a tax that would raise 10 to 20 times more, or about $300 billion to $600 billion. 

Taxing corporate profits can be tricky, said Mark Witte, an economics professor at Northwestern University, because corporations might try to delay declaring their profits.

When it comes to luxury taxes, Young said that the U.S. attempted this in the early ’90s. The George H.W. Bush administration enacted  which included private boats costing more than $100,000, cars costing more than $30,000 and jewelry costing more than $10,000, among other items. 

But critics said the luxury tax “depressed sales and employment in the affected industries” and that it raised  Congress  (it repealed the tax on automobiles about a decade later). 

Back then, Americans weren’t fighting inflation, Young pointed out. The luxury tax was meant to raise revenue to help reduce the federal deficit. While depressing sales was seen as a failure of the luxury tax in the ‘90s, that would be the point today.