2. Wealth taxes reduce revenue and well being for all

(Karl, Adjuct#TaxFoundation, former Economics@ChapelHill, https://www.bostonreview.net/forum_response/karl-smith-wealth-tax-will-hurt-economy-not-help/ , 3-17)

Emmanuel Saez and Gabriel Zucman make two quite different claims about a progressive wealth tax. It is necessary, they say, not just to raise government revenue, but also to curb the injustice of our current system and to protect democracy from the ruinous effects of inequality. While they make a convincing case against concentrated power, they fail to show why a wealth tax, and only a wealth tax, would effectively combat the ills they intend to address. Their central contentions—that such a policy would diminish the power to influence government policy, stifle competition, and shape ideology—are simply taken for granted. They devote hardly any space to their most import assertion, that the income of today’s superrich is earned at the expense of everyone else—and thus that everyone else’s well being will be improved if a wealth tax were implemented.

In fact, by their own estimates, the radical wealth tax they endorse would bring in less and less revenue over time, since it would erode very large fortunes and prevent new ones from being created. For the same reason, it would also reduce revenues raised by the capital gains tax, the income tax, and the estate tax. A radical wealth tax could thus leave the less well off worse than they are today. For their argument to work, the decline in wealth over time must produce meaningful gains for the average American. But there are a number of problems with this presumption.