David Bahnsen writes in Commentary magazine about the negative effects of a proposed wealth tax.
[N]o dramatic images of opulence intended to stoke the fires of envy in all of us will change one basic fact. Far and away, the most common use and function of wealth is to facilitate wealth-producing activities. A tax on wealth is misguided for no bigger reason than that it is actually a tax on productive activity.
The tax will be levied on the capital necessary to fund businesses, new technologies, new pharmaceuticals, new medical devices, new construction projects, and innovation. It is easy to isolate a particular wealthy person and think of that person giving up a piece of his or her assets to fund a government program. But the impact across society is a raid on the supply side of the economy, on the productive activities that are the most important in generating economic opportunity.
You may decide to believe (erroneously) that high-net-worth people just hide their money in bank accounts and that the wealth tax would not take from the innovative and productive parts of our economy, but even this notion begs for an understanding of how capital markets work. That “mattress money” Joe Billionaire has “buried” in his bank account is itself the deposit base that banks use to make mortgages, lend to small businesses, and finance economic activity.
The rationale for a wealth tax is wrong because the tax code is already highly progressive, and because the impact of a tax on wealth would be felt by the beneficiaries of wealth-creating activities in a free society—those whom Warren claims to want to help. Confiscating wealth from wealthy people satisfies a class-warfare agenda, but it takes productive capital and makes it nonproductive capital—the most misguided notion in all of economics.