Theft is illegally taking something. Taxes are part of the legal system. Literally not theft.
Ethically is it right to increase the risk to accumulate wealth? That depends on what you buy with that risk. It’s well-established that people will take risks for fun, and they’ll take significantly more risk when security for themselves and their family is on the line.
Folks with hundreds of millions or billions in assets or millions in income have vastly higher levels of security compared to folks with $100 in the bank and a $15/hr job with no benefits.
So, how much is it ethical to take from the rich to ensure that the poor have decent odds to improve their situation and have a basic level of security? In America, it’s been as much as 60% in income taxes for the highly-paid. A wealth tax of 40% upon death still exists, even if the rich have found a way around that. It sounds like America has already established that 40% taxed to the benefit of all is ethically okay.
So we should probably be killing the buy, borrow, die strategy of tax avoidance, especially on transfer taxes should be collected. But could we take more from the wealthiest and have that be ethically okay?
Let’s say we have someone with $300M in assets and those appreciate 8% annually on average. Those assets will be worth $600M in 10 years. Assuming a spend of $10M per year, they’d still be worth $400M by the end of 10 years. So we’ve had at least $100M generated compared to where we started just for existing and living a lavish life. But we could have taxed that $100M at 40% and put 40M into public services, infrastructure, or entrepreneurial grants to provide tens of thousands of people with more security without materially affecting our asset-owning individual. Even just distributing $40M to supplement incomes for low-security folks would translate to 2500+ people getting a chance to improve their situations.
So, is it ethical to tax the excess asset appreciation that the individual didn’t use for anything? It’s not that it didn’t grow, it’s that it grew a little less fast. And we were able to impact thousands based on that. I’d argue yes, and I struggle to understand how “make life no different for the individual vs make life better for thousands of people” comes down on the side of the individual. It’s not until taxes grow higher than appreciation that I start to think it might be unethical.
But as you approach taxes equaling appreciation, I can see how it could be counterproductive. I think that’s not the argument though. It wouldn’t be terribly difficult to tax assets based on appreciation above their highest appraisal, with appraisal triggering taxes being owed. Certainly no more complicated than our current taxes assets and the loopholes that lead to buy, borrow, die.