Wealth Tax

Do you want to move money from the wealthy to the poor? Well, tax wealth.

Wealth tax causes far less market distortion, and hence, much fairer than income tax. Wealth tax hurt productivity less. If you live in a capitalistic country, then your income is yours fairly. However, Bob’s wealth might not be traceable to productivity. Bob might have gotten his wealth through inheritance gained through slavery, or genocide. The link between wealth to productivity is less than the link between incomes and productivity. Hence, wealth tax discourages productivity less than income tax.

Wealth tax also has meritocratic justification that can actually increase productivity. Property rights are effectively contracts between a person and the society. Part of the contract is that the society will protect the person’s property.

Well, if you protect Bob’s land, you should get paid right? Wealth tax is then effectively protection fee we pay to our local gangs we call governments. How much a society should get paid for protecting wealth? Natural pricing schemes will be of course something proportional to the amount of wealth protected.

Let’s examine this issue.

Wealth Tax as Protection Fee

The year is somewhere in 13th century. Kublai Khan attacked China. The peasants don’t bother fighting. Why? Because all they have, their life, they can take with them in refugee. The lands belong to landlords anyway. So just let the landlord fight.

The Sung emperor realized this. So, the Sung court provided land sharing to peasants. Now the peasants have something worth dying for, land. However, it’s kind of late. Also, that enraged the land owning landlords who switched side to the Mongol. There goes Sung dynasty, the most prosperous country in the world at that time.

Say a foreign investor puts 1 million dollars in 2 countries each. The first 1 million go to, hmmm