Wealth tax - No


#1056 (In Topic #795)
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Today I read an article about Sen Elizabeth Warren proposed a "wealth Tax"[1].  Simply stated if a person has over $50 million dollars this tax would require the person to pay 2% of this in taxes and if they have over $1 billion they would pay an additional 1%.  I am surprised the article tells us many people support this proposal.  This is a bad idea.  Higher income tax rates make much better sense.

In the most favorable way to look at this proposal, it is a tax on savings.  If you are smart enough to be able to save $50 million dollars, Sen Warren would like you to pay $1 million dollars extra in taxes every year.  At least with savings you have the money to actually be able to pay the bill.  That is not the case for most people with this kind of wealth.

In the most sympathetic case, you can look at why Ohio does not have an estate tax any longer.  Imagine a family farmer who has a farm and equipment that adds up to more than $50 million dollars.  In this case that farmer likely does not have an extra $1,000,000 in cash laying around.  Chances are he will have to sell some land to pay for this tax.  Eventually, you drive all the family farms out of business and all you have are corporations.

The cases most people think they are concerned about are the Bill Gates or Sam Walton.  But the misconception that most people have about the wealth of these individuals is that everything you hear about is money in the bank that they spend on lavish life styles.  When in fact, a lot of this “wealth” is stock in the company.  For instance, a 2014 article in Computer World gave a figure for Mr. Gates stock value at $13.6 Billion.  To a person like Mr. Gates those 20 million shares are what allows him to make decisions that keep Microsoft a strong business.  If the government were to tax that $13.6 billion dollars and force Mr. Gates to sell stock in order to pay that tax, the government is making Mr. Gates give up 3% more control of the company.  The Senator Warren proposal has this happen every year until eventually Mr. Gates can no longer make decisions on behalf of the company. 
I believe that those people that create cutting edge businesses should not be forced to give up control of their companies like this wealth tax would require.  Instead, it makes better sense to tax the income they get when they voluntarily cash out and sell a portion of their control. 

Last edit: by Tom_McMasters


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If you do Facebook here is a post that was started by someone who that this was a good idea.    https://www.facebook.com/david.esrati/posts/10155763593666126?comment_id=10155765788821126&notif_id=1549469978865708&notif_t=feedback_reaction_generic
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