Wealth tax encourages spending/investment rather than hoarding

(Eric, Wealth Tax: Definition, Advantages & Disadvantages TheStreet.com , lexis)

Purpose of a Wealth Tax The stated purpose of a wealth tax is threefold. 1. Create a Policy That Can Reach Wealthy Taxpayers Wealth tax advocates argue that income taxes are poorly structured to reach the wealthiest citizens. Unlike working and middle-class taxpayers, the highest earners typically make most of their money from investments and property holdings. As a result, it has historically proven difficult to write an income tax policy that can target the wealthy as effectively as it targets salaried and hourly workers. Wealth taxes allow policymakers to reach the assets of the wealthiest citizens more effectively, both increasing government revenue and making the system fairer. 2. Reduce Pools of Stagnant Wealth One of the problems with wealth concentration is that it encourages productive capital and property to go unused. When a taxpayer has millions of dollars, much of that money is likely to sit unspent in a bank account or an underdeveloped property. Wealth taxes would encourage people to spend and use their capital. If the money that sits in a bank account or third home will get slowly eroded by taxes, then the taxpayer's incentive is to spend and invest that money instead of letting the government seize it. Rather than having stagnant pools of useless capital, a wealth tax gets money moving, either by encouraging private investment or by letting the government spend it. 3. It Reduces Inequality The of Americans hold approximately a third of total net worth in the U.S., according to Federal Reserve data. Worldwide, the captured two-thirds of all new wealth worth $42 trillion created from 2020 to 2022, according to Oxfam. A wealth tax would reduce that. By targeting this directly, the government could slowly redistribute it. This would both fund programs that tax advocates support and would reduce inequality by reducing the holdings of the ultra-wealthy