Sunday, November 3, 2019
A Few Ways in which the Warren/Sanders Assaults on Billionaires would Backfire
Transaction Tax: The answer to a transaction tax is to stop having any transactions. Form or join an offshore entity whose function is to buy/sell/hold US securities, as a mutual fund does. The ultra-wealthy American simply buys and holds an interest in the offshore entity, so no transaction tax. The offshore entity is free to buy and sell stocks and bonds with no transaction tax as long as the transactions don't go through a US exchange. -- The real burden of a transaction tax would fall on ordinary workers whose 401K retirement plans currently make a fair number of transactions.
Wealth Tax: The ultra-wealthy American moves themself and their wealth to another country and renounces US citizenship. Yes, it would be a significant inconvenience for them, but their contribution to the US Treasury would be completely gone. Yes, Warren/Sanders propose to tax Americans renouncing their citizenship (which may or may not be legal), but there is always a window between when a law is enacted and when it takes effect, so those wanting to leave would just do so quickly.
I wish Warren/Sanders would approach the issue of taxes on the ultra-wealthy as a logical issue, rather than trying to create a campaign issue by inciting hatred of billionaires in the way Trump incites hatred of migrants. We can greatly increase the tax revenue our US Treasury receives from the ultra-wealthy, if the issue is addressed as an optimization problem rather than through hate mongering.
Further reading: Billionaire Bill Gates doesn't oppose the idea of a wealth tax, but points out the fatal flaws in the absence of global cooperation. https://www.foxbusiness.com/markets/bill-gates-us-wealth-tax