There’s little doubt that the political flavor of the day is what the left calls “democratic socialism.” And one of this movement’s more recent ideas, from Sen. Elizabeth Warren, is to impose a “wealth tax” on the wealthy. Sorry, senator, it’s an old idea — one that’s thoroughly discredited.
To begin with, the wealth tax is nothing new. It’s been tried by many nations, but most who’ve tried it have dropped it. As recently as 1990, according to the Organization for Economic Cooperation and Development, 12 of its member countries imposed a wealth tax on citizens. Today, it’s just four.
The irony is that those who ended their failed experiments with the wealth tax are those that America’s “democratic socialists” say they most admire. That includes Denmark and Sweden, nations often cited by people like Warren, Sen. Bernie Sanders, and Rep. Alexandria Ocasio-Cortez as worthy of emulation by the American left.
Why did those countries drop wealth taxes? As The Tax Foundation noted, “Countries have dropped the taxes due to the challenges they pose.” Among others, those challenges include wealthy people fleeing the country to avoid taxes, and declines in investment and jobs.
Warren’s proposal is radically simple: She wants to tax anyone with net assets over $50 million 2% a year on their wealth. If you have over $1 billion in net assets, the tax goes up to 3% a year.
Taxing, Or Theft?
Gee, you say, why not tax the rich? It would transfer $2.75 trillion of wealth from those who earned it to wasteful big government. That’s not taxing, it’s theft, and very likely unconstitutional. Why start down that socialist road now?
Worse, wealth taxes can have very bad effects. Take France. There, “A wealth tax imposed on assets over 1.3 million euros led to an exodus of taxpayers from the country. In 2016 alone, 12,000 millionaires left France, the highest outflow in the world.” The year before, 10,000 millionaires left.
And it’s been going on for years. As Simon Black of the Sovereign Man website noted, “In France, 513 wealthy households left the country every year for 35 years because they were tired of paying a wealth tax — taking an estimated $175 billion of assets with them.” This, Black adds, has cost France some 400,000 jobs.
Even Sweden Ended Wealth Tax
This explains in part why France’s Gilets-Jaunes are demonstrating. Their taxes go up as the wealthy leave. But that’s always the case when socialists tax “the rich”: When the rich leave, the middle- and lower-classes, who can’t afford to move, pay more of the tax burden.
As for Sweden, its tax brought in about $600 million a year, but ultimately cost the country some $200 billion in capital flight. Not worth it.
If Warren and her socialist buddies get their way, it will happen here too. Democratic presidential candidate Michael Bloomberg is exactly right, likening wealth taxes and other items on the far-left’s agenda to what’s going on today in Venezuela.