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So what happens once nobody that owns anything of substance is a US Person? Are you going to start seizing American companies from their shareholders or something?
More importantly, does anybody even read Hayek anymore?
My proposal did not hinge on the nationality of the owner, or them being a natural person or identifiable. As long as the asset is physically within the US, the US can tax it just fine.
I also think it fairer to tax investors in the country of their assets than in their country of residence, which is the opposite of what the US is doing. If a US citizen builds a thriving business in Somalia, I simply do not see how this is Uncle Sam's business (apart from the wealth transferred in or out of the US, perhaps). She is certainly not depending on the US to secure her property rights or provide legal security. By contrast, if a rich Swiss person is buying a mall in the US, he is asking the US for a lot more: that the US shall uphold the doctrine that individuals can own unlimited amounts of land, that the police please prevent robbers and looters from ruining his investment, that the court system be fair and not rule against him just because his name sounds too French. Let him simply pay the same capital gains tax a US citizen who owned the same property would pay, and if he does not like it, he can always invest in China or India instead.
This would have an additional practical advantage. For the billionaire class, becoming a citizen of a tax haven is not a big problem, while investing their wealth in a tax haven will likely be difficult. Sure, your social media company will not pay taxes, just restrict profiles to residents of the Cayman Islands. You want to pay taxes in Ireland? No problemo, just design, produce and sell your smartphones there.
In so far as taxation is theft, yes.
I just looked up the guy on WP and did a ctrl+F tax:
Hm, it seems some vandal replaced his ideas with neoliberal strawmen.
I disagree with him about inheritance tax. Say we have a progressive inheritance tax which caps the amount parents can pass to their children at 10M$. A billionaire with a single child might spend 990M$ to on "placing them in prestigious and high-paying positions", instead of only the customary few millions for Harvard, private tutors and so on. But he will find that spending money on education and prestige has diminishing returns. The last million he spends on his kid will not be increase their lifetime earning potential by 1M$. Turning your child into a movie or sport star, or sponsoring them to run for public office is all nice and well, but even if it works, most stars are not billionaires and most public officials do not manage to grift billions either.
Progressive taxation can very easily be justified through utilitarianism. There are diminishing returns to wealth and income. The difference between driving a 500$ car and driving a 10.5k$ car is a lot bigger than the difference between driving a 100k$ car and driving a 110k$ car.
I think it is generally more enlightening to look at wealth inequality than income inequality, because what counts as income will be subject to zillions of complex regulations of tax law, while wealth is much more easy to quantify. Just assume that everyone gets born in some natural state without a penny to their name, and if they end up being a billionaire, they must at some point have increased their net worth in a way which would in principle be taxable (unless the gains were made in Somalia).
The wealth Gini for the US is 0.85. Students of mathematics will notice that this is a lot closer to one (one person owns everything) than zero (everyone has equal wealth). If we use wealth as a proxy for "taxation potential", we can see that Hayek when he asserts that raising the taxes on the 0.1% would amount to insignificantly small amount of total tax revenue.
In the US, the marginal federal income tax goes from 10% (for the first 11k$/year) to 37% (for dollars made above 578k$). Looking at WP, it looks like the highest income quintile pays more than twice as much taxes as all the other quintiles combined. This means that if you do not want to change the budget, a flat tax rate would have to be roughly the same as the 24% effective tax rate charged to the fifth quintile, say 22%. (In reality, it would likely be a bit closer to the 29% the top 1% are paying.)
If you tax the poor quintile (currently taxed at 1.5%) that amount, the effect will be that they will unable to make ends meet, so one way (social security) or another (prisons), the state will have to pay for their cost of living.
When he whines about the rich people being suppressed by the poor minority, my response is that there is no human right to unlimited wealth. Capitalism is neither just nor god-given, but it is a system which works much better than all the other systems which have been tried, so societies are willing to accept high income inequalities to reap its benefits. The present deal seems very favorable to the 1%, and asking them to pay a lot to keep the status quo does not seem inherently unfair.
Assuming that the WP excerpt was a fair summary of Hayek's ideas about taxes, I can understand why he is not widely read today.
Your policy specifically encourages people not to have wealth in the US.
It's not like nobody tried this. François Miterrand famously did in 1981 and pretty much destroyed French industry. With disastrous enough consequences he had to reverse course.
People will move investment away from the US if you do this. All that nice Silicon Valley startup nursery environment will not remain. They will go elsewhere. And if you successfully suffocate your ability to innovate, you'll slowly bleed out like Europe is bleeding out right now.
Fairness doesn't enter into it. It just doesn't actually work unless you're willing to back your words with arbitrary arrests like the Chinese do. And it's unsustainable in the long term because it destroys your mechanism for innovation. Which is where the neoliberal is of any relevance.
I don't really care that there is or isn't high inequality, I care that my society survives and thrives. Eating the rich doesn't actually do any of that.
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