A wealth tax incentivizes productive uses of wealth and could finance other government programs

A wealth tax could raise significant amounts of revenue. Even though Warren’s wealth tax would only apply to a small number of households, it could bring in substantial revenue, about $3 trillion over the next decade according to the estimate from Saez and Zucman. This is money that could be used to finance other government programs like childcare or infrastructure. A wealth tax seems fairer to some. A billionaire entrepreneur who owns their own company, like Bezos or Zuckerberg, is currently able to delay taxes on their business wealth. “If you never sell the stock, you will remit no capital gains taxes. If you pay no dividends, you will remit no individual income taxes at all as a result of owning that stock. To some, there is something unsettling about people who have tens of billions of dollars of wealth who pay little in taxes,” said Hoopes. They would not have the same ability to avoid a wealth tax. Wealth taxes could incentivize more productive uses of wealth. Since a wealth tax chips away at a person’s holdings each year, Lee thinks it could motivate them to spend or invest rather than hoarding. “In the long term, the wealth tax would encourage people to be more productive as otherwise your wealth would diminish gradually for you and your heirs,” he said.