Taxing Wealth 101
Students: All those wanting to impose a tax on the wealthy, so as to rightly collect revenues to be redistributed among those they favor as being those who can favor them the most, this is the set of questions that shall not be heard much less answered:
What asset (1) and to whom, buyer (1) shall the wealthy sell in order to raise the money to pay the wealth tax?
What asset (2) and to whom, buyer (2), shall buyer (1) sell in order to buy asset (1)?
What asset (3) and to whom, buyer (3), shall buyer (2) sell in order to buy asset (2)?
What asset (4) and to whom, buyer (4), shall buyer (3) sell in order to buy asset (3)?
What asset (5) and to whom, buyer (5), shall buyer (4) sell in order to buy asset (4)?
What asset (6) and to whom, buyer (6), shall buyer (5) sell in order to buy asset (5)?
What asset (7) and to whom, buyer (7), shall buyer (6) sell in order to buy asset (6)?
What asset (8) and to whom, buyer (8), shall buyer (7) sell in order to buy asset (7)?
What asset (9) and to whom, buyer (9), shall buyer (8) sell in order to buy asset (8)?
.... and so on in the never-ending circle of economic life.
Homework: Should we exclude the possibility that a “fair”-tax on the wealthy ends up being an un-fair tax on the poor?
See you tomorrow!
PS. Explanation: When, as a redistribution professor :-), I had in the past heard those questions and tried to answer these, I was confronted with:
Professor: Having so many having to sell assets, could this not depress asset values, and thereby the economy, and therefore actually in the long-run perhaps even disfavor those who could be temporary favored with a share of the wealth tax, net after our redistribution “costs”?
Professor, does it not seem like that the intermediaries in all the buying/selling of assets, will benefit even more than us redistributors and the redistribution receivers?
Professor: Should we not prioritize asset (wealth) creation over wealth (asset) redistribution? Would that not generate even more tax revenues for us to redistribute? I remember having heard legend holds that when 1974’s Carnation Revolution’s chief strategist, Otelo Saraiva de Carvalho, told Sweden’s Social-Democrat Olof Palme: “In Portugal we want to get rid of the rich”, Palme replied, “how curious, in Sweden we only aspire to get rid of the poor”.
This also works for Inheritance Tax 101
Students: All those wanting to impose an inheritance tax, so as to rightly collect revenues to be redistributed among those they favor as being those who can favor them the most, this is the set of questions that shall not be heard much less answered:
What asset (1) and to whom, buyer (1) shall those inheriting assets sell in order to raise the money to pay the inheritance tax?
What asset (2) and to whom, buyer (2), shall buyer (1) sell in order to buy asset (1)?
And so on…PS. The origin of this post can be traced to:
Legend holds that when Otelo Saravia de Carvalho, of the Carnation Revolution, told Olof Palme, “In Portugal we want to get rid of the rich.”, Palme replied, “How curious, we in Sweden only aspire to end the poor.”
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