'Wealth tax' would rob innovation, says analyst

Friday, October 18, 2019
 | 
Chris Woodward (OneNewsNow.com)

cash 100-dollar billAnyone who's paid any attention to this election season has likely heard a candidate or two throw out the idea of a wealth tax. But what is that exactly?

"A wealth tax is distinct from an income tax," explains Adam Michel, a tax policy analyst for The Heritage Foundation, a center-right think tank in Washington, D.C. "It would be an entirely new tax system overlaid on top of our existing one."

To put it another way, it would be like having to comply with the estate tax or the "death tax." But it would not just be after one's assets are passed on to his heirs; it is a tax on the total accumulated assets of any given person every single year.

Michel

"It's often described as a small one or two percent or three percent tax. However, because it's on a stock rather than the earnings every year, it can translate to have incredibly high effective income tax rates of above 100 percent," Michel explains.

The analyst says that means people will be investing and innovating less. "It's really a total change in the way that we think about a government's relation to our money," he adds.

Supporters of a wealth tax include Senator Bernie Sanders (I-Vermont). He likes the idea as a way of funding new and expanded health and social programs.

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