Eating the rich, one finger at a time!
There is something absurd about the Left’s fantasies about taxing the “super rich” to fix the broken economy. It is not specifically that it is evil – that is a matter of different opinions – but that it is impossible.
As I have mentioned before, the real super rich are not like Disney’s Scrooge McDuck, who has his money in a silo full of coins and bank notes he can bathe in. Rather, their wealth takes two basic forms: Stocks and bonds. Stocks are part-ownership, mostly in running businesses. Bonds are money lent to other. There are also various derivatives of these, such as the option to buy a stock or a bond at a certain price at some future time. But it really boils down to these two types.
Now say you decide your economy is so messed up that you need to grab 10% of the wealth of the super rich. It is not really sad for them, they still have more than they need for a thousand years of comfortable living, which the Light is unlikely to grant them in any case. But let’s look at what happens when they try to pay their taxes.
Alternative one: They try sell enough stock to finance their extraordinary tax. This is done on the stock exchange, as the name implies. Suddenly there is a glut of sellers and a lack of buyers. This is what we usually call a “stock market crash”. We had one in 1929, heralding the Great Depression. We had another heralding the current troubles, which are the troubles that motivate the Left to want to eat the rich in the first place. So the solution is another stock market crash?
Well, this may seem harmless enough if you are 25 and unemployed. Seeing Wall Street crash and burn, figuratively at least, will probably be satisfying. Not so for your parents: All pension funds are heavily invested on the stock exchange, and everyone’s future pensions will start to unravel before their eyes. This is not a good idea to sign into law for a President who plans on a cushy retreat position as, say, anything other than a panhandler.
Well, how about the bonds? Some of these will mature – the loans fall due – over the course of the year, so these at least should be easy. Just take the money and don’t lend it out again, pay your taxes instead. Fine. But credit has become a bit of a cornerstone in society. Factories or shops that don’t get their credit extended Â have to close their doors, even if they otherwise run a profit. In fact, the infamous “financial crisis” that threw the rich world into recession recently was caused by a lack of credit, rather than anything else.
Let us quickly mention the fact that states also depend on credit these days, and a credit panic would cause them to be unable to pay civil servants, state pensions, food stamps etc. Of course, they could just compensate by taxing the rich more…
It is not that it is impossible to tax the rich without the world going down the drain. Many countries tax their rich more than the USA (and a few tax them less). That is not the problem. The problem is the time scale. You can’t confiscate 10% of their wealth one year, or the economy will start spiraling toward death and destruction. You could grab 0.5% each year for 20 years and get the same money with no measurable disruption. But the problem with this is that it won’t solve your problem right here, right now. Even shooting every one of America’s super rich and taking all their money – provided you magically could do this without causing a panic – would only be enough to keep the US debt at its current level for a year, rather than the usual skyrocketing increase. Stealing a measly percent or less simply has no noticeable effect, but it will insult the corporate overlords that wines and dines the politician class. Not worth it, in other words.
How do you eat an elephant? One bite at a time. It’s the same with eating the rich. You have to start doing it a generation before you are going to spectacularly mess up your economy. With the current scarcity of time machines, I don’t see a great past for this in America. (Of course, we did it in Norway. We do everything right in Norway. We are simply the best. We were created in God’s image, and then we evolved. Just ask any of my fellow Norwegians.)