In response to Veronique de Rugy’s recent column, "History tells us that wealth taxes don’t work," when I evaluate an opinion piece, I investigate possible biases of the author. De Rugy is a senior research fellow of the Mercatus Center at George Mason University. She references a Mercatus Center colleague and a study for the Center for Freedom and Prosperity as well as the American Action Forum and the Tax Foundation. All these are Libertarian, conservative, right-biased sources.
My own bias is that of a center-left, financially comfortable physician with middle-class origins who has benefited from the economic policies of this capitalist system.
Having been an active investor since the 1980s with over 100 individual stocks and a number of mutual funds, I have noted the increasing economic inequity since the 1970s that now rivals that preceding the Great Depression. I receive recommendations yearly for corporate actions on my holdings and, invariably, board of directors of virtually every corporation advises votes for increasingly generous executive compensation and advice against transparency regarding corporate political contributions and diversity studies and remediation. It’s no wonder the perspective of our executive and upper-class is increasingly separated from that of the working class and the real entitlement attitude is not from the relatively powerless poor but from the rich as they seek more political control and fewer restrictions. It seems that any tax is anathema to “good business.” These practices have shifted $50 trillion from the bottom 90% to the top 1% since the 1970s, according to a September Time magazine article.
According to De Rugy, the above sources state that Sen. Elizabeth Warren’s proposed 2% tax on annual wealth over $50 million rising to 6% for wealth over $1 billion will cost workers 60 cents for every dollar of revenue raised because they say that this tax would not reduce consumption by the rich but would decrease their investments. Recall that these sources also maintained that the corporate tax welfare from the last tax reform would save jobs, raise wages that would trickle down and they also believed that corporations would repatriate overseas revenue, but it mostly benefited investors when corporations bought back stock to prop up prices.
A cursory analysis reveals that 2% of $50 million is $1,000,000. That seems like a lot until you realize that you have $49 million left. Six percent of $1 billion is $60,000,000, leaving a paltry $240,000,000 to feed your family with a little left to save for your yacht. The 2018 data reveals that only 205 taxpayers occupied this stratospheric realm of more than $50 million. Consider, also, that the IRS estimated that the wealthy hide 20% of their wealth from taxes. Even if we had 205 billionaires to cough up $60,000,000, the total would only be $12.3 billion. Heck, we spent around $14 billion for the 2020 elections. I wonder if this proposal was a trial balloon to see how the anti-tax GOP and public would respond. It’s a rounding error for both the rich and for the cost of real infrastructure investment.