I am very much not in favor of a wealth tax. I am very much in favor of increased income taxes for high-earning individuals.
(The Koran sets Zakat at about 2.5% of someone’s total wealth. As most countries in the west base their tax structures on the Bible’s 10% tithe, many Islamic countries structure their taxes like the Zakat.)
(Edited to add: So we can see how this works in those countries.)
Why do I prefer income taxes over wealth taxes? Because income is already liquid cash, for the most part. It’s easy to value because it is already liquid. Wealth is hard to value because some assets have not been bought or sold recently or ever; and until it is sold at arm’s length on an open market, the value is contentious.
But even worse- it contains working capital and investments. Imagine what would happen if a farmer had to pay 10% of the value of their fields and equipment each year. Imagine what would happen if a landlord had to pay 10% of the value of their real estate holdings each year. Imagine if someone who owned a small business had to pay 10% of the value of their business each year. It’s not liquid; it may not be easy to liquidate enough to pay the taxes, and it would probably raise prices for the rest of us a lot.
On the other hand, diverting income is a lot easier; it’s already liquid and has a value. We’ve tried having higher income taxes; traditionally the highest tax rates have been 2-3 times as much as they are now, and they worked fine. It resolved a lot of the issues of income inequality too, although there was also a depression that took care of some of it as well.
IMHO, having a 50% or even 75% tax on income above say $5MM a year (preferably with lower tax brackets for certain “windfall” income profiles which are non-repeatable like lawsuit wins, lottery wins, sale of buildings and other long-held assets) works a lot better than a wealth tax.
Why exclude lottery taxes? Because every Joe Sixpack out there thinks they are going to win it big some day, and they don’t want to pay more taxes on it because that’s their ticket to retirement. Remove that threat to their plans and I think they will be more likely to support such a clause.
