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I can well believe that wealth taxes have bad incentive effects, as do other taxes on capital and labour income, but haven't heard a clear argument that they're worse than the alternatives, at appropriately low rates.
Bezos can keep his job & still find himself newly beholden to more conservative interests with less personal skin in the game. I think this matters — where would SpaceX be? If you're not taking the tax until a sale, it's just a worse capital gains tax that disincentivizes risk.
Long run, this would kill innovative venture in the US. *Maybe* you can trap some extant capital here by threatening to confiscate a huge % of it on exit, but who wants to sign up to gradually lose their own successful business in advance? RIP, this chart https://twitter.com/sknthla/status/1070031703421333504 …
I definitely worry about capital flight under a wealth tax. That's why Piketty argued it had to be done cooperatively with other countries. USA does already tax capital on exit though (when people give up citizenship).
Usually I also like concentrated ownership of companies, as groups who have a lot of their $ in a company have the greatest incentive to pay attention and manage it well. That said,
i) Do we have any evidence on whether companies actually do much better when founder/CEOs retain control for many years? I could also see them being worse in various ways and boards being right when they remove them (e.g. skills to run big corp are different than to start one).
"If you're not taking the tax until a sale, it's just a worse capital gains tax that disincentivizes risk." <-- That's an interesting point. Can you explain how best to think about that comparison?
Capital gains is a tax on the *profit* from a sale, while a wealth tax hits the current value of stock. Even with crazy high capital gains —say 90% — if your stock gains *any* value, you won't lose money. With a 3% wealth tax, anything under a 3% return is effectively a loss.
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