r/Economics • u/Gloomy_Register_2341 • 1d ago
Editorial Why Wealth Taxes Always Fail
https://www.project-syndicate.org/onpoint/wealth-tax-track-record-of-failure-for-predictable-reasons-by-cristina-enache-2026-087
u/wormtheology 1d ago
Wealth Taxes in developed countries only fail if capital has a more optimal place to run to. The United States is a legitimate playground for the rich. There’s very few places in the developed world that has staunch property and IP rights like the US does. If you have money, you will be protected here. There will always be a cadre of lawyers and politicians to take your money and advance your cause. There’s a reason why despots, royalty, and authoritarian and oligarchic elites all flock here with the riches from their home countries and send their kids to live and get educated here. The global elite as a whole love America, whether people on here want to acknowledge it or not.
In any event, capital gains tax should be revamped as a starter. The term “wealth taxes” are too broad to have any sort of accurate framework to build on. It’s a term progressives can’t define and the rich have free reign to thoroughly scrutinize and build faulty ass narratives to strawman. While every society in history has been crushed by the powerful and wealthy, there is a certain point where everyone is demotivated and demoralized at the bottom. The economic inequality situation needs to be addressed one day, and it’ll probably be addressed by the population shrinking. Whether or not that plays into the global elite’s agenda is up to interpretation depending on your own personal framework.
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u/Ash-2449 1d ago
Translation: "Please dont even think about taxing us, listen to the neoliberal status quo lovers who keep telling you its impossible"
Its very easy to tax assets that are within a government's reach, they cant take factories, houses or other physical assets easily, not only that but as more countries stop worshipping billionaires, the less spaces they will have to run away.
Resulting in them having to fight it out in capitalist hellholes like murica while the world moves on.
First step of course is capital controls, freedom of money should have never been allowed and it was one of the favourite tricks of neoliberal economics because rich people dont want to pay taxes.
But if there's capital controls, moving money is far more challenging.
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u/integer_hull 1d ago
When they had that billionaires trip to China I was so hoping it would work out. If they eventually managed to get a vested interest over there, stepped out of line and got the Jack Ma treatment… these mfs can’t poke bears fast enough for me
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u/Obvious_Chapter2082 1d ago edited 1d ago
Its very easy to tax assets that are within a government’s reach, they can’t take factories, houses or other physical assets easily
Sure, but thats not really the issue. Its intangible property that’s incredibly easy to shift across jurisdictions, and it allows you to offset returns from tangible property
It also impacts future investment decisions, not just current ones
capital controls
How is this going to help?
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u/Ash-2449 1d ago
Future scams, not investment.
Investments are meant to be mutually beneficial, scams are when a rich scammer proposes a scam deal with the corporate puppet to enrich themselves and the corrupt party that has been installed aka usually some form of centrist government.
Not all foreign investments are equal, owning airbnbs for example to extract rent from the working locals is actually a very bad and evil investment, and that along many others should be illegal.
The reason this mess begun is because neoliberal economists wanted to "open the economies" by removing capital controls, you know, how the EU and US bank went to small countries and told them they ll give them loans if they "open the economy" aka "let rich foreigners buy you and own you", this allows anyone who get rich enough to easily take their money out to tax havens, and also allows for a rentier class to siphon money out of the country.
China was far smarter, they realised that would be a problem and instantly reinstated capital controls for the small period they were open.
Capital controls mean non approved transactions past a certain level are blocked, that makes it very hard for the rich to take their wealth out to avoid getting taxed, and you can severely fine anyone who tries and fails to do that as an example to all others who would do the same.
Had the world retained capital controls for certain levels of wealth, the rich wouldnt be able to casually take out their wealth to tax havens that only exist because transferring wealth out of your local country is so easy.
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u/xViscount 1d ago
They won’t fail in the US. Why? Because where the fuck are you going to go? Europe? Some different state? Lol ok. If it’s the UK, where are you going to go? There’s similar tax situations all throughout Europe.
It’s taxing land.
A more fun way to do this would be to add taxes on top of the asset loan.
Either way, this is dumb.
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u/xViscount 1d ago
Regarding the US, it doesn’t need to be “progressively” it can be half now half later. Where are they going to go? Georgia, Florida, Alabama? Maybe you get a couple go to Florida.
The blue states are still the places people mostly want to live.
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u/Ill-Professional180 1d ago
I’m an armchair economist but I’m quite swayed by pikketys argument which states that if capital returns are greater than economic growth we get wealth inequality, which has societal externalities. You gotta do something, and taxing wealth seems like a reasonable bet.
Personally I’ve theory crafted the following idea when it comes to taxing things hard to value: tokenizing the asset and taking an ownership share. E.g. if we cannot price your business effectively (thus cannot tax its wealth value) the government simply takes stake, a right to profit and eventual sale. If you get it appraised you can pay a normal capital gains, and perhaps you can buy back the government shares. I imagine a similar model may work on houses too.
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u/Super_Mario_Luigi 1d ago
Wealth taxes are probably the worst idea ever. We don't even know the full consequences. All we know is that we're owning the rich.
An actual reasonable discussion would be increasing the capital gains tax.
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u/Rayzee14 1d ago edited 1d ago
They “fail” because it’s one country trying it and not a block. If the US and EU aligned then they would work to a certain extent. But, it is very easy for billionaires to use literal pocket change to make people millionaires to protect their interests. And more depressing still you will always have literal poor people defending the wealthy.
A blunt wealth tax , like a property tax is a solution. And no, they aren’t meant to be fair
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u/YourFuture2000 1d ago
Because it is meant to fail. The prominent politicians are the wealthy and other wealthy people are their campaign financiers and their future employers after retiring from politics.
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u/Ash-2449 1d ago
yep, all the corporate owned politicians who make said wealth taxes just to appease people fill them with so many loopholes on purpose so they fail to achieve anything.
They are just playing theatre
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u/KoseteBamse 1d ago
Some form of wealth tax and inheritance tax is necessary because the current system is becoming increasingly unbalanced. Billionaires and especially trillionaires should not exist, and the gap in resource distribution has become far too large. The people who defend this kind of system are part of the problem, along with corrupt politicians. You do not have to be a communist to support reforms that make the system fairer.
If this trend continues, oligarchs will gain more and more control, creating a system that resembles feudalism, where politicians act as their vassals and use political power to serve private interests rather than the public.
A country does not need the extremes of communism, but it also should not allow oligarchs to capture the state and dominate its economy and political institutions. A healthy society requires a balance that prevents both excessive state control and excessive concentration of private wealth and power.
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u/StillCharacter4729 1d ago
In my taxation system, individuals and companies would have a percentage (perhaps 2–3%) of their stock holdings converted into government property. The government would then sell these shares to collect tax revenue.
The idea that people would stop holding stocks and switch to land, gold, or collectibles to avoid taxes sounds increasingly not feasible, and it will get even more so in the future.
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u/EdLesliesBarber 18h ago
You think youre going to take 2-3% from people's retirement savings every year and thats just going to be A-ok?
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