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This is a great article that presents the pro's and con's.
It was interesting to note there were only two cons presented:
It was interesting to note there were only two cons presented:
What Are the Disadvantages of a Wealth Tax?
Not surprisingly, not everyone is quite so sold on the idea...
1. IT WON’T WORK
In recent decades, many nations have tried some form of a wealth tax. Most have reversed course after discovering how difficult it was to measure and enforce. Not all assets are in the form of stocks and bonds, or piles of cash in bags marked with dollar signs. Consistently assessing the value of privately held corporations or investments divided into infinite pieces and funneled through a half-dozen subsidiaries with holdings of something… well, it’s a mess. And what about things like artwork or rare collectibles?
Besides, opponents argue, if you “punish” people for being rich, they’ll simply move to a country that’s nicer to them. They can afford to, after all. This is sometimes called “capital flight,” and we see it happen with big businesses all the time. You want us to pay more taxes? Fine – we’ll set up shop on the remote island of Glutzenberg and do business from there instead. King Wally says we’re welcome anytime.
2. IT’S UNETHICAL AND UNCONSTITUTIONAL
Like a property tax, a wealth tax is a double tax – the government takes its share when the income is made, then again each year after that income has transformed into assets. Opponents argue that in addition to actually discouraging success and investment, it’s simply wrong and “un-American.”
It might also be unconstitutional. Article I, Section 9 of the U.S. Constitution is a list of things that Congress is not allowed to do. The fourth clause says this:
No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.
The thing about “in proportion to the census” is because the federal government wasn’t expected to tax individuals. The states taxed individuals, and the federal government had the right to expect contributions from the states. The money may have come from individuals, but indirectly. That changed with the passage of the 16th Amendment in the early 20th century. In case you don’t have your Pocket Constitution on you, it says this:
The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
In other words, it changed the rule from Article I, Section 9. That’s what Amendments are – “edits” to the Constitution which update or alter the fundamental laws on which our nation is theoretically run. But notice the specifics – “taxes on INCOMES.” Not taxes in general.
Now, the thing about constitutional law is that nothing’s ever as simple or straightforward as you and I might expect. But this is enough of a snag that it might make passing a wealth tax tricky.
Not surprisingly, not everyone is quite so sold on the idea...
1. IT WON’T WORK
In recent decades, many nations have tried some form of a wealth tax. Most have reversed course after discovering how difficult it was to measure and enforce. Not all assets are in the form of stocks and bonds, or piles of cash in bags marked with dollar signs. Consistently assessing the value of privately held corporations or investments divided into infinite pieces and funneled through a half-dozen subsidiaries with holdings of something… well, it’s a mess. And what about things like artwork or rare collectibles?
Besides, opponents argue, if you “punish” people for being rich, they’ll simply move to a country that’s nicer to them. They can afford to, after all. This is sometimes called “capital flight,” and we see it happen with big businesses all the time. You want us to pay more taxes? Fine – we’ll set up shop on the remote island of Glutzenberg and do business from there instead. King Wally says we’re welcome anytime.
2. IT’S UNETHICAL AND UNCONSTITUTIONAL
Like a property tax, a wealth tax is a double tax – the government takes its share when the income is made, then again each year after that income has transformed into assets. Opponents argue that in addition to actually discouraging success and investment, it’s simply wrong and “un-American.”
It might also be unconstitutional. Article I, Section 9 of the U.S. Constitution is a list of things that Congress is not allowed to do. The fourth clause says this:
No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.
The thing about “in proportion to the census” is because the federal government wasn’t expected to tax individuals. The states taxed individuals, and the federal government had the right to expect contributions from the states. The money may have come from individuals, but indirectly. That changed with the passage of the 16th Amendment in the early 20th century. In case you don’t have your Pocket Constitution on you, it says this:
The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
In other words, it changed the rule from Article I, Section 9. That’s what Amendments are – “edits” to the Constitution which update or alter the fundamental laws on which our nation is theoretically run. But notice the specifics – “taxes on INCOMES.” Not taxes in general.
Now, the thing about constitutional law is that nothing’s ever as simple or straightforward as you and I might expect. But this is enough of a snag that it might make passing a wealth tax tricky.
