Wealth Taxes Don’t Reduce Inequality
There are too many have-nots and too few haves to make much difference.
Wealth taxes wouldn’t have much impact
Photographer: BloombergThe biggest problem with wealth taxes, at the center of economic policy discussions this year, isn’t so much that they are difficult to collect and potentially conducive to capital flight. It’s that they don’t achieve their stated goal of reducing inequality.
The wealth tax proposals of U.S. presidential candidates Elizabeth Warren and Bernie Sanders are symptoms of a renewed interest in the idea of taxing not just incomes but fortunes. Perhaps the purest argument for this idea was made this year by French economist Thomas Piketty in his new book, “Capital and Ideology.” Piketty’s idea is to use confiscatory taxation to do away with permanent property; not even U.S. progressives go that far.