Wealth tax not answer
To the Journal editor:
Once again, the idea of a wealth tax has arisen.
There are two unique characteristics of this tax: (a) It has always been repealed; (b) It has never produced the projected revenues.
Consider: It eliminates investment. It, as opposed to other taxes which tax the proceeds of the wealth-producing engine, taxes the engine itself. You and I are expected to pay for the short fall. It recalls an economic tenet that states: you can’t make a poor man rich by making a rich man poor.
In the first case, it is assumed a majority of a person’s wealth can be taken and the person will keep trying to produce wealth.
Then after taking a big slice of a person’s wealth the first year, one expects to find the same amount of wealth the second year. How is that possible?
Generally a tax is levied to pay for a new program. While in time the wealth tax is repealed the program is not, so a different tax must be levied to pay for the new program.
Some people continue to believe one can stick it to the rich without hurting the poor first and harder; in spite of contrary evidence.
There are variations of the wealth tax such as the luxury tax which put U.S. boat builders out of business or discovered people could buy a Rolls in England and have it shipped here cheaper. Note this tax was only 10%; but 10% of a big number is a big number and some are suggesting a wealth tax of 80%! Sure that’ll work (?).
One may recall the Savings and Loan crisis of a few decades back when builders bought desert property to develop as retirement communities sometime in the future and politicians decided to tax it as though it was already developed and earning income. The developers simply walked away from their mortgages. Hence the S&Ls foreclosed on worthless property and taxpayers had to bail them out.
The big crime here is not ignorance of so many people but that most politicians know better but figure that this is always good for a few votes by declaring “soak the rich.”