Kevin Carson and I had a tiny Twitter fight on the wealth tax (taking place a few days ago as of August 21, 2020). He defended such an anti-individualist and authoritarian measure and I criticized it. Twitter, however, is not the place for discussion (seeming to be nothing but a swamp of radicalism) and here I shall disprove the idea that a wealth tax is in any way beneficial to workers or the poor or to the nation as a whole.
The first major problem with a wealth tax is quite obvious. If such a tax were implemented, the wealthy would abandon the country and take their money and businesses elsewhere. This would lead to mass poverty and hurt hundreds of thousands or even millions of families. In a 2006 Washington Post article on France’s experimentation with a wealth tax showed that it led to capital flight. The French tax raised $2.6 billion a year, but cost the economy $125 billion.
If you’d like to see this in action in the US, look at cities affected by white flight. Black people moved to the city hoping to start a new life. White people, fearing the idea of having to live next to someone not of their race, moved away and took their businesses and money elsewhere. The new black residents don’t have the skills to run the now abandoned factories and businesses (and, even if they could, the sheer number of them would be too much to handle) thus leading to widespread poverty and disrepair to infrastructure.
The second major problem is that it raises too little revenue for it to be effective. According to the OECD tax economist Sarah Perrett, the wealth tax was ineffective “because many assets were exempt, and wealth taxes were easy to avoid.” Asked about its track record, she responds, “I would say, in general, it hasn’t been great.”
How then can we redistribute wealth? Mutual banks privatized currency, deregulation, and the free market. This will allow individuals the means to found their own businesses and have fewer barriers to enter the market. This will allow the raising of incomes and eat away at corporations and their wealth. We see this in Vietnam and Mexico. In Vietnam, street food is so abundant and cheap that corporations like Burger King and McDonald’s cannot enter the market. In Mexico, tacos are so common and so cheap that Taco Bell could not enter the market. Mutual banks and privatized currency will allow individuals the ability to borrow the money to fund a startup. Deregulation will allow the coat of doing business to be low. This will create so much competition that no corporation could survive and there would be better products, cheaper products, and lower prices. This will be like the situation in Vietnam and Mexico but across all sectors of the economy.
My friend believes in authority, not liberty. His belief that the free market cannot redistribute wealth is proof he is a statist dressed in anarchist clothes. The wealth tax would create job loss and result in the decimation of the American economy. Just because my colleague has a Wikipedia page doesn’t mean he is right.