Wealth taxes are all the rage. Several states are proposing one, and, Senator Elizabeth Warren recently reproposed a wealth tax (this is not Warren’s first wealth tax rodeo), which she now calls the “Ultra-Millionaire Tax”. She is proposing basically what she has already proposed, but, this time, it is because the pandemic (proposed under the camouflage of COVID, if you will).

Some notes:

• I have several past posts on the wealth tax, here:

Do Billionaires Move to Avoid Wealth Taxes? What Does the “Evidence” Say?
The Guillotine Tax
Dead Birds and Taxes
You may have to fill out a wealth tax return
How is Wealth like YouTube Downloads?
An Argument Against an Argument Against the Wealth Tax
A Republican Wealth Tax?
Is a Wealth Tax Constitutional, or Can We Even Know?

• Its pretty easy to point out the many flaws in the wealth tax (as I do above). But, is this a reason not to implement one? No. Not really. Rational policy weights the costs of a particular method of raising revenue with the perceived benefit of the additional revenue. Flaws with the tax need only enter into that calculus, not doom it. For example, imagine standing in 1850 and talking about an income tax. It would sound crazy: You expect people just to report an accurate income? Who will pay it? How will people keep track of how much income they earn when some people are literally just handed cash for a living? People will certainly under-report their income, move to other countries, cheat, etc. Are we really going to hire federal employees to check all this? The constitution does not allow for an income tax. Won’t this reduce people’s incentives to work? What do we do if people earn negative income, as can happen? If we don’t also have a business income tax, won’t people just earn income through their business and not be taxed (and if we do, won’t businesses just pass that tax on to their customers)? Etc. Etc. Etc. Yet, we have an income tax. Might we be better with something other than an income tax? Maybe. But, my point is only that flaws, even myriad flaws, with a tax, do not mean we should not necessarily implement it–we need only take these things into account as we consider whether, on balance, the proposed tax is a good idea.
  All that said, I don’t think that there is compelling evidence that the net benefit of the wealth tax is positive, and, Janet Yellen seems to agree.
• I love the name “Ultra-Millionaire”. I am hoping Senator Warren can come out with other types of millionaires as well, all with their own “special” taxes: Ultra-Millionaire, Uber-Millionaire, Super-Millionaire, Hyper-Millionaire, and, my favorite, Mega-Millionaire. Each one more despised than the last, but none as despised as The Billionaire. It seriously feels like a pantheon of Marvel arch-villains. At a net worth of over $12 million, I am not sure which category of millionaire Warren herself will fit into, but, hopefully time will tell.

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