Taxing wealth is the next logical step

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52. couple this with a repeal of the income tax and you've got a capitalist economist's wet dream

economists don't like transaction taxes because they distort the "true" market, leading to misallocations of goods and services. this is the downside of taxes if you care about resource allocation. the income tax discourages income-generating activities, and worse, because different types of earnings are taxed at different rates it encourages unproductive activities such as disguising labor income as investment income, etc.

a wealth tax punishes mostly hoarding, and encourages idle resources to be put into production, so true capitalist economists love this sort of tax. the classic argument is the art collection benefitting no one but the owner -- a tax would encourage the owner to put the exhibit on display (if only to pay the tax bill) thus benefitting more people.


and liberals prefer the income tax only because it's more progressive than most other taxes. well, a wealth tax is likely to be quite progressive, possibly even more progressive than the income tax.


one practical problem with the wealth tax, though, is that it can be much easier to hide wealth than income. income taxes two, and you at least often have to worry about your counterparty reporting their loss or expense. wealth, on the other hand, can be concealed or can be claimed to have been destroyed or damaged.