Sen. Elizabeth Warren, D-Mass., is proposing a one-time tax on the wealth of the rich at a rate as high as 3 percent. Sen. Bernie Sanders, I-Vt., is going much further, proposing a 77 percent death or inheritance tax.
The ideas of these two liberal presidential aspirants are basically the same, merely imposed at different rates and at different times of life.
They’re also both impractical and immoral ideas. Sanders is far worse on both counts. Both measures neglect what so many of today’s self-styled revolutionaries fail to grasp: The Constitution enshrines the rights of everyone, and that even includes the wealthy.
Sanders and Warren’s ideas both are extreme proposals that would unfairly double-tax income. Having already earned the money and paid a high progressive marginal tax rate on it — in some cases higher than 50 percent when state and local taxes (and corporate taxes, in the case of stock and dividend income) are included — Americans who earned more would be called upon to pay yet another tax on whatever they should have left over. Such double-taxation is imposed on no one else.
Both Sanders and Warren’s taxes would punish those who save wisely, and it creates an effective deduction for those who spent their fortunes in foolish pursuits. Those who invested and created jobs in profitable businesses would suffer the most.
Worst of all, both Sanders and Warren’s taxes would be levied against wealth that is not necessarily liquid and which might not be liquidated. Already, the existing inheritance tax forces profitable and socially useful enterprises that employ thousands of people to be liquidated in order to pay the tax — just ask the former family owners of the Buffalo News, who were forced to sell on the cheap to pay the tax. A wealth tax or a super-high inheritance tax would exacerbate this problem, devouring the jobs and livelihoods of many workers.
The purpose of tax policy is to fund necessary government services, not to impose economic equality. It absolutely is not to start people off on the same economic footing in life. Government is not entitled nor allowed by our Constitution to sit in moral judgment over any level of accumulated wealth, nor over how much, if any, one’s descendants are worthy of inheriting.
With the exception of thieves, robbers and those who monetize government service or government connections, the free-market system funnels wealth to those who make themselves most useful to society. Steve Jobs died a rich man not because he made someone else poor but because he came up with ideas that made everyone’s life better. Profit is the incentive for innovation, and part of the goal of profit is that famous bit of the American dream about leaving something to one’s offspring.
The reckless destruction of profit by government is the opposite — it is the great destroyer of innovation and risk-taking.
The Democratic Party has lurched quite far to the left in recent years. It is now dangerously cultivating in its adherents a hatred for those who have earned money. Democrats should ask themselves whether this hatred and envy is a righteous motivator for their politics.