Do wealth taxes make sense?

Thomas Piketty has a new book out where he advocates a 90% global tax rate for billionaires. Elizabeth Warren recommends a 2% tax on all wealth above $50mm. They are dying to solve a problem by attacking the effect not the cause. Poor wealth distribution is an effect, not a cause. Wealth concentration happens when capital returns are high. That means there is a relative shortage of capital compared to what must be a surfeit of labor. Why should we blame the capital owners for such a circumstance? We can and should enforce monopoly laws more seriously so we avoid the concentration of just a few companies in a particular business. Does congress have the power or nerve to tell Wall Street that the next giant merger they’re planning is a no-go? (Apparently not). If they did, that would help a lot. We don’t need to whine about Google’s market share – there are many industries with only two sellers and we see oligopoly style pricing. Mergers are bad for competition and (consumer) choice. Breaking Google or Facebook in two would worsen both industries, from a consumer perspective. The White House has found the exact cases that we don’t need to attack.

Increased business competition would help but it would not change the global labor surplus problem. If production were more local and less global – just a little, then labor would have more power. If a product was once produced locally and is now imported then those goods must be taxed – yes a sales tax or a tariff. That new revenue must flow directly back to the damaged locations that lost jobs by virtue of this production transfer. We must make it harder for companies to access cheap 3rd world labor. If they respond with better technology that requires less labor then so be it. At least that technology was created here.

Rogue states that steal IP or block our imports must be cut off in a rather severe manner. Appropriate quotas or tariffs must be introduced gradually. We have let this mess grow for 25 years (since we gave China MFN status) and it has infected virtually all aspects of our economy. The first thing to do is stop its growth and from there roll back the infestation – gradually.

Where does Pickett address the global labor surplus? Perhaps he thinks nothing can be done about it. Warren seems to have no clue about the cause of poor returns by labor so she attacks capital owners as though playing Robin Hood will win her the nomination. Robin Hood was a thief and so is Warren if she taxes, again, income that has already been taxed.

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