#WealthTax: "Turning capital into consumption must destroy the capital that produces consumption."

"[There's a] difference between wealth and consumption. The poor wish consumption. Turning capital into consumption must destroy the capital that produces consumption. Taxing wealth in the name of inequality will make the world, including the poor, much poorer. ...

"[T]he vision of high lifestyle amid destitution imagines great inequality of consumption. The current outrage, and demand for confiscatory taxation, is over inequality of wealth. (And that, largely mark-to-market wealth driven by high prices.) There is a big difference.

"The hard fact: Our billionaires, and now trillionaire, own wealth that is almost exclusively stock in companies they created. That wealth is almost entirely left reinvested in those companies. And the companies produce great products, innovate, and employ thousands. ...

"Musk’s trillion is not the ready inventory of a huge grocery store that can be handed out to feed people. And if it were, once the store was empty, the poor would be hungrier again, and there would be no store to buy from. ...

"The world’s rich consume very little of their wealth. The worlds’ poor consume a lot of whatever they have. Being poor is not fun. If we split up Musk’s $1 trillion and gave about $100 in Tesla stock to each of the world’s nearly 10 billion people, it’s a good bet they would not be content to consume only 1/10 of a cent extra per year.

"There are plenty of other reasons wealth taxation will not help. Even the billionaire’s wealth, even if it could be transferred and consumed without destroying the seed corn of our economy, is trivial. ...

"The biggest reason it will not work is the simple one: incentives. If you tax wealth, you tax the activities that create wealth. ...

"I too would love to raise the prosperity of the world’s poor. The goal is not the issue. The issue is whether the wealth tax will help or hurt.

"What helps? This graph from Max Roser at Ourworldindata makes the point beautifully..."

The x axis is GDP per capita, not time. 

The y axis is the share living in extreme poverty. 

What helps the poor? Growth. Capitalism and growth. 

Degrowth and wealth taxation will push us right back up that slope.

~ John Cochrane from his post 'Wealth tax equilibrium accounting'

“But let me offer you my definition of social justice: I keep what I earn and you keep what you earn. Do you disagree? Well then tell me how much of what I earn belongs to you - and why?”

~ Walter Williams, from his book All It Takes Is Guts: A Minority View