The COVID-19 pandemic has presented a wonderful opportunity for those of us who want greater control over our lives. Sadly, too many Americans have already taken the bait. We've allowed politicians and bureaucrats to dictate to us what's an essential business and what isn't, who has access to hospitals and who hasn't, and a host of minor and major dictates.
Leftist politicians who want to get into our pocketbooks are beginning to argue that the COVID-19 pandemic is the best argument for a wealth tax. Let's first define a wealth tax. A wealth tax is applicable to and levied on a variety of accumulated assets that include cash, money market funds, real property, trust funds, owner-occupied housing and other wealth accumulations. Assume a taxpayer earns $150,000 a year and falls in the 32% tax bracket. That individual's income tax liability for the year will be 32% x $150,000 or $48,800. Say the taxpayer has a net worth of $500,000 consisting of a business or home and the government imposes a wealth tax of 32%, the person's tax liability is $160,000.
The problem with most politicians is when they enact a law, they seldom ask, "Then what?" They assume a world of what economists call zero elasticity wherein people behave after a tax is imposed just as they behaved before the tax was imposed and the only difference is that more money comes into the government's tax coffers. The long-term effect of a wealth tax is that people will try to avoid it by not accumulating as much wealth or concealing the wealth they accumulate.