Modeling a Wealth Tax

I personally think there are too few of the big, risky ventures these days, and too many low value-at-risk software-only startups (aiming to be bought up by a FAANG), but that is just an opinion.

In retort, these companies are started by young risk takers, many of whom have a safety net. A set of redistributive policies could expand that volume to folks who are arbitrarily excluded.

Assuming it could be effectively and efficiently administered, replacing all income taxes with a wealth tax (and VAT) would massively simplify the tax code while making it significantly more fair and heavily rewarding those actively generating the greatest returns.

Under such a scenario, the only people significantly negatively impacted would be those who hoard wealth or invest it poorly, and as a consequence are unable to overcome the periodic tax.

As to its fairness: when the wealthiest pool their resources in order to protect their assets’ value, as is the case in e.g. a hedge fund, we see them happily sign up to a 2% yearly levy.

A more elaborate metaphor makes situation more vivid still: imagine the scenario in which America’s wealthiest were to all move to a “Galt’s Island”, except in doing so they left the American security blanket and became entirely responsible for the defense of their assets. In such a scenario, the idea that the merely wealthy would pay the same as the hyperwealthy immediately stops making sense, as it’s the hyperwealthy who are both benefitting most from the security afforded, and the ones who are most responsible for Galt’s Island being so tempting a target.

America is Galt’s Island, except we have seen a systematic shifting of the burdens of its upkeep from those who can most easily afford it to those who can afford it least.

If you want a little more depth on taxation proposals, I’d recommend the Saez and Zucman book [1] that underpinned most of the candidates’ policies: The Triumph of Injustice. All tax policy, including wealth taxes (like property taxes in the US), involves decisions about redistribution. Optimal tax theory is about trying to maximize revenue which includes considering the impact on capital / income “giving up”.

[1] https://www.goodreads.com/book/show/45894166-the-triumph-of-...

Wealth (standing still, unused) doesn't have an impact on anyone. The money doesn't go anywhere, influence anything. It's when money moves that affects people.

So why should people worry about taking wealth? Why not simply continue taxing the movement of money? When money is generated or transferred -- isn't that enough scope to achieve the desired outcomes of a wealth tax (which would otherwise be very difficult to implement)?