Afternoon Must-Read: Tyler Cowen (2013): Wealth Taxes: A Future Battleground

Tyler Cowen (July 2013): Wealth Taxes: A Future Battleground: “The coming battles over wealth taxation may prove especially bitter and polarizing….

It doesn’t seem fair to the holders of that wealth to suddenly pay additional taxes on assets that they thought were in the clear, and such taxes would signal that previous policy has failed. Higher wealth in a nation means that there is more to take, and growing inequality means there are more problems that its government might seek to remedy. At the same time, however, this new economic configuration will mean greater political influence for the holders of that wealth, and that will make higher wealth taxes harder to achieve. Historically, economists–including me–have generally favored taxes on consumption, on the grounds that they would do the least damage to long-term savings, investment and economic growth. Yet in some eyes, rising wealth will become a tempting target for short-term political gain. And note that while most Republicans currently oppose consumption taxes, they may dislike the relevant alternative, namely wealth taxes, even more. Get ready to choose a side.