WHY A WEALTH TAX IS A BAD IDEA: Billionaires are better at figuring out what to do with their money than the government will ever be.

AuthorMangu-Ward, Katherine
PositionFUTURE

THE PRESIDENT'S BUDGET is the lawmaking equivalent of a vision board or a mission statement: a moderately delusional wish list that is intended to provide motivation. The president's budget is never legally binding--Congress still retains some tenuous grip on the purse strings--but it is always instructive.

President Joe Biden has long been, in the immortal words of Editor at Large Matt Welch, a rusty weather vane, creaking reluctantly in the direction that the winds of his party blow. With his new budget proposal, the breezes have finally brought us to the shores of a serious wealth tax debate.

Biden isn't calling his proposal a wealth tax, of course. It's the "Billionaire Minimum Income Tax," and it imposes a minimum 20 percent tax on the income of households with more than--oddly--$100 million in wealth. Biden's proposal is smaller and more pragmatic than the earlier variants from Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.)--par for the course with Biden. Most notable is that even with implausibly optimistic estimates of the federal government's ability to collect, the whole mess is supposed to raise an average of a mere $36 billion per year over the next 10 years.

The University of California, Berkeley, economist and Warren adviser Gabriel Zucman estimated what several billionaires would pay under the plan's 20 percent tax on unrealized gains in illiquid assets, pinning Jeff Bezos' bill at $35 billion, Warren Buffett's at $26 billion, and Jim Walton's at $7 billion.

Anyone who has been paying the slightest bit of attention to federal spending over the last several years knows that figures that begin with b instead of t are now considered rounding errors. The point of this wealth tax is not to raise revenue. It has two rather different aims.

The first is pure political calculus. A floundering, unpopular president seeks to demonstrate a willingness to punish a small, unpopular class of people. A Reuters/Ipsos poll last year found that nearly two-thirds of respondents agree that the very rich should pay more taxes: 64 percent either strongly or somewhat agreed that "the very rich should contribute an extra share of their total wealth each year to support public programs."

In attacking Sen. Joe Manchin (D-W. Va.), who continues to stand athwart the Democratic Party's worst ideas vaguely muttering "stop," The New Yorker described agglomerations of wealth as "unsightly," which captures the spirit of the thing quite nicely...

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