If anything is a glaring example of pandering, misguided,
authoritarian, collectivist tendencies, it is Sen. Elizabeth Warren’s proposal
to institute a “wealth tax” against individuals with large assets. Not only is her proposal likely an unconstitutional
violation of the Constitution’s prohibition against direct taxation, it is a
policy designed to penalize success in order to grant Washington the power to redistribute
earned wealth to those who haven’t earned it.
In essence, Warren is proposing the seizing of assets from some in order
to pay off the political constituencies she prefers.
For generations, economists have suggested that the economy functions best when
people save their money, and invest it in areas that help the economy
grow. As an economy grows, overall
wealth increases, benefiting all. This
does not mean that equal outcomes ensue, or even that equal outcomes are desirable. Instead, it means that the producers and
investors help grow the economy, producing goods and services valued and used by
people of all economic circumstances.
One needs only look at some of the products created, many of which did
not even exist twenty or thirty years ago, to see the value of allowing
producers to earn, keep, and invest their funds. Cell phones, pharmaceuticals that cure
disease, and personal computers are among the products that were unobtainable a
generation ago, but now owned by rich and poor alike. Although there is obviously inequality in
incomes, the fruits of a vibrant economy are made available to all. The wealth tax, instead of encouraging
savings and investments, instead instigates the squandering of money.
Warren, and others of her ilk, believe that the economy is “rigged,” and that
only intervention by a select group of bureaucrats and technocrats, using money
seized by producers, will allow the attainment of her goal of income equality
and equal outcomes for all. Instead of
recognizing the value producers and investors have on the economy, Warren
advocates a lowest-common denominator form of economic “equality” in which one’s
skills, abilities, and contribution to the economy are ignored and unrewarded,
while those who do not offer goods and services needed by the economy are
unjustly compensated. She is under the
mistaken assumption that wealth is a fixed-size pie, in which one’s success
denies others the opportunity to achieve success. Warren ignores, or is ignorant of, the fact
that wealth can, and is, created and can grow.
As with other politicians with socialist tendencies, Warren ignores the
failures of other nations that have imposed wealth taxes. In the last 27 years, the number of nations
instituting wealth taxes has decreased from twelve to four. It is also worth noting that although Warren
claims the wealth tax will only affect the “richest of the rich,” nations with
a wealth tax have always quickly lowered the wealth standard to include those
with middle-class incomes. Like the
income tax, which was originally levied only on the super-wealthy, any wealth
tax will eventually (and quickly) be expanded to affect almost all wage
earners. Once government gets a taste of
additional tax revenues, its hunger for more taxes to fund politicians’ pet
proposals inevitably increases.
Even if one ignores the inherent immorality of seizing one’s earned assets
(which were already taxed when they were initially earned), one can not ignore
the huge and intrusive bureaucracy that must be established to ensure
compliance with the wealth tax. The
wealth tax is not limited to assets in financial institutions which can easily
be traced; it also is levied against any fixed assets or property owned by the
citizenry. Will tax authorities be given
the power to break into people’s homes to ensure that they are properly
declaring the value of their furniture, artworks, clothing, vehicles,
etc.? Will people who invest in tangible
goods be penalized, while people who squander their money on consumable products
and experiences (such as opulent food, entertainment, and travel) be spared the
burden of the wealth tax? How is it fair
that those who prefer tangible property over experiences should be burdened by
additional taxes?
In practice, any imposition of a wealth tax will likely lead to the conversion
of assets to easily hidden and transferable assets like precious metals and jewels. In fact, the institution of a wealth tax will
likely cause the creation of a parallel, underground economy, in which gold and
silver are used for untraceable transactions.
This will place a burden on the national currency system, causing an
outflow of assets that must be replaced by the printing of additional
currency. This, in itself, will create inflationary
pressures that could be as significant as the hyper-inflation experienced by
Weimar Germany in the 1920’s and ‘30’s or more recently, Venezuela. Capital used for investments will diminish, resulting
in a stagnant or collapsing economy.
Finally, Warren’s proposal includes a caveat that attacks even the appearance
of individual liberty and self-determination.
If a person subject to the wealth tax decides that he or she wishes to
relocate to a nation that actually values productivity and success, that
individual will be subject to a confiscatory tax that seizes 40% of their total
assets before they can move. Not since
the fall of the Berlin Wall have we seen any nation erect such substantial
barriers to prevent its citizenry from seeking out greener pastures or freely
moving wherever they wish. Warren is proposing
the imposition of an economic prison that will extort wealth from producers and
limit the ability of producers to engage in self-determination. In essence, Warren is advancing the creation
of an economic despotism that replaces free-enterprise and rewards for success
with a centralized, socialized, command economy dictated by a small group of
selected “elites.” Not only is her
proposal immoral and unconstitutional, it repudiates the values of individual
liberty upon which our nation was founded.