Originally posted on Quora October 27, 2021
While using taxes to conduct class warfare has always been a hallmark of Socialism, the Democrats have taken their dogmatic economic illiteracy to new heights by proposing a tax specifically on the equity of the 600 something billionaires in the US to fund an additional $3.5 trillion in pork barrel spending and gibsmedats for constituents. The proposed “wealth tax” is a farce even from a cursory glance; it is blatantly unconstitutional (read the 16th amendment) and does not even achieve its objective because the proposed wealth tax would only raise 500 billion which is enough to maybe pay the interest on the national debt but nowhere near enough to pay for $3.5 trillion in new spending or even pay down the $3 trillion deficit. To put this matter into a better perspective, the combined wealth of all billionaires in the US (4.6 trillion as of April 2021) is far less than Federal outlays for this year (6.8 trillion) and the previous year. Hypothetical if we confiscated the wealth of all billionaires in the US, and assume a stock market crash wouldn't ensue, we still wouldn't be able to run the federal government for an entire year. I use the term “fund” colloquially because every hairbrained soak the rich scheme coming out the Jackass party is based on the assumption of sound money, which we haven't had since 1933; funny how Marxist economics is based on the same false assumption as the supply siders with the additional labor theory of value. Similar ill conceived sentiments are borne out of the antiquated sound money assumption like billionaires are “hoarding” wealth. But unlike the aristocrats of old who did in fact horde wealth in vaults of specie and large estates, the nature of billionaires’ primary source of wealth (equity in their company) cannot be horded; it is in constant circulation being used to produce more wealth for society at large in the form of goods, services and incomes for others to use to buy those goods and services. Forcing billionaires to liquidate shares in their company to pay a wealth tax would definitely make them less rich, and it might reduce wealth inequality a little, but it wouldn't make the poor richer because real wealth cannot be “redistributed” through taxation. Real wealth is the actual real resources, capital, goods and services people produce. What leftists think is wealth, the market capitalization of companies billionaires own a large minority share of ( which is used to calculate their net worth) only exists on paper. Billionaires like Musk and Bezos essentially own a lot of poker chips but they can leverage them to enjoy luxuries the average Joe can only dream about. If leftist understood how fiat money works they would know that at the federal level taxes take money out of circulation and destroys it. A wealth tax does nothing more than destroy wealth. There is no gain to the government or society in forcing billionaires to sell of billions of dollars in shares to God knows who (they never think their proposals through) for the sole purpose of reducing their equity in their company. It's not like minimum wage workers are going to buy up the stock billionaires were forced to sell. If anything they'll just sell off what they need to pay the tax when their companies shares are overvalued and buy it back during market corrections or ideally during downturns defeating the objective of reducing wealth inequality entirely. Alternatively they will actually horde their wealth in real estate, specie and art like the fuedal lords of the past which only hurts society in the long run. There is ample evidence that billionaires are much smarter than the people writing the tax laws.
The quickest surefire way to tank the wealth of billionaires is to stop buying their crap. Instead of ordering cheap Chinese manufactured furniture on Amazon, spend a few extra bucks and a little more time at your local consignment store. If you want a bicycle go to your local bicycle co-op instead of defaulting to Wal-Mart. The only people making these billionaires richer are consumers who value expediency and low prices more than supporting main street.
Elsewhere on this page I have suggested alternative forms of revenue to current tax systems in place.
If taxes should serve any purpose aside from revenue generation it should be to 1) impose user fees for public goods and exclusive rights and 2) curtail rent seeking. The biggest changes I would suggest are taxing royalty income from Intellectual property at a higher rate than wages, which Ideally shouldn't be taxed at all, and using land value capture in lieu of sales taxes and property taxes on primary residences.