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Reblogged:The Wealth Tax Is Weaponized Envy

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Venture capitalist Paul Graham makes short work of explaining the economic impact of the wealth tax, an idea that has been popping up on the left a lot lately.

After quickly laying out what the tax is and how to compute it, he considers a case -- innocuous-sounding to nearly anyone, I would guess -- of a two percent wealth tax being levied against the founder of a successful small company:

It may at first seem surprising that such apparently small tax rates produce such dramatic effects. A 2% wealth tax with a $50 million threshold takes about two thirds of a successful founder's stock.
Who knew envy, weaponized by the welfare state, could be so dangerous? (Image by Richard Prisinzano, via Wikimedia Commons, license.)
How? As Graham notes, wealth taxes compound, unlike income taxes.

Graham's short analysis is well worth passing along. Any poor Americans who, as the saying goes, "see themselves ... as temporarily embarrassed millionaires," will oppose the whole idea as soon as they learn this. Moreover, many (if not most) Americans will understand what a deterrent this would be to innovation and investment.

And yet the idea doesn't drown in gales of laughter.

The innovator and the capitalist -- often the same person -- benefited many individuals, as attested by the willingness of so many to exchange hard-earned money for the products or services offered by the business. The whole idea of taking their money because of this success, year after year after year, is so unjust as to be ridiculous.

That it doesn't sound ridiculous is in large part because we have become so inured to the idea that it is okay for the government to confiscate money. To practically everyone, this proposal will register as just another tax, perhaps rating a ho-hum if it rates a thought at all.

Pass along Graham's analysis, yes, but don't call compounding the problem with the wealth tax. The real problem is the injustice -- foisted on us by envious intellectuals -- of penalizing success and the widespread, unthinking acceptance of the idea that taking money is a proper role of government.

-- CAV

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