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  1. Opinion

Why the wealth tax doesn’t work

Sure, fix capitalism’s flaws, but a wealth tax is not the way. | Adam Goodman
FROM PRINT: Adam Goodman, national Republican media consultant
Published Oct. 19
Updated Oct. 21

From decorous boardrooms to dusty factory floors, genuine acts of corporate citizenship – of conscience, generosity, giving back -- are now very much in vogue in America.

It appeals to the best in all of us, and is being cheered on by the U.S. Chamber of Commerce Foundation, the Business Roundtable and by every CEO looking to expand the impact of success so everyone benefits.

In fact, maximizing profit is no longer enough for a company’s brand and image if it means workers are compromised, community stakeholders are ignored or principles are purged.

Yet today, after more than a decade of prosperity, America’s bottom line may bottom out if promises to make capitalism more available to all prompts an all-out political assault on success -- and all those “guilty” of it.

In last week’s Democratic debate, the fourth audition for the right to square off against the president, almost every contender confessed they would immediately tax the rich to pay for stuff, a lot of stuff. The problem is, that won’t be nearly enough to foot the bill for the policies they favor or the programs they prescribe.

“Medicare for All” (private insurance for none), tuition-free college and a “Green New Deal,” alone, are projected to cost $100 trillion or more. Add in the interest on the national debt, which in a few years will eclipse spending on national defense and veterans’ benefits, and you’re looking at real money we just don’t have.

Joe Biden’s campaign may be tired and fading, but his prescient warning that someone at some time (that is, our children) are going to have to foot this bill is spot on.

Naturally, this hasn’t discouraged Elizabeth Warren, Bernie Sanders and other presidential wannabes from advocating a “wealth tax” they believe is not only an economic necessity but also a moral imperative. This reflects two schools of economic thought, one outdated and the other controversial: John Maynard Keynes (government is good) and French economist Thomas Piketty (economic inequality is worsening and can be remedied, in part, by taxing the rich who’ve stacked the deck and dealt the rest of us out).

The “wealth tax” – a special government levy on one’s assets above a certain amount – appeals to the popular notion that if you’ve achieved more you should give back more – to the government. While many business icons talk openly about donating more of their wealth to the good of the nation and the world – Warren Buffet, Bill Gates, Mike Bloomberg – the feeling isn’t universal among progressives, much less billionaires.

Ask billionaire progressive star Oprah Winfrey, a self-made entertainment phenom who openly and frequently disses the notion the rich should be singled out for special financial punishment.

Ask the nations who have adopted then summarily rescinded wealth taxes in recent years – Germany, Austria, Sweden, Denmark, others – because instead of generating additional revenue and equitable re-distribution, their penalty on success chased away badly needed capital and investments.

More concerning for those who fear this is part of an economic debacle in the making, Warren and Sanders have made it personal, calling out and closing down any and all who have had the temerity to succeed. Their rhetorical hook: these companies and individuals have prospered in part through a gruel of greed mixed with a dash of corruption.

This is cut-and-dried class warfare. Win votes by pitting one group against the other, one person against another, by branding a Scarlet Letter onto the foreheads of the innocent under the guise of punishing the guilty.

Whereas Donald Trump took on the establishment of politicians and political bedfellows to win the presidency three years ago, the majority of Democrats vying to replace him are now indiscriminately impugning Americans whose only sin is they succeeded by dint of innovation, ingenuity and hard work.

In other words, why work at all when government is there to provide all.

Call me radical, but I believe capitalism needs to be updated, upgraded and, where broken, fixed. That includes closing tax loopholes, closing down gender bias in hiring and promotion and creating a new currency of goodwill that drives business to do the right things for the right reasons for their workers, their customers, and the nation at large.

Unprecedented government spending at levels we’ve never seen, and attacks on private sector triumphs, imperils an economy that continues to employ, grow and prosper.

And if this becomes a rallying cry for the left and a battering ram for the right, rest assured it will fully scare everyone in the middle.

Adam Goodman is a national Republican media consultant based in St. Petersburg and the first Edward R. Murrow Fellow at Tufts University’s Fletcher School of Law and Diplomacy.

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