The Morality of a Wealth Tax
State-Sponsored Robin Hood
The idea behind a wealth tax is pretty simple, actually: If you accumulate a certain amount of wealth—property, cash, vehicles—once the value of your wealth reaches a certain number, you are taxed on that wealth.
This has an immediate appeal to some; it frees up money from those who might be "hoarding" it or who have no material need for so much. By taxing the ultra-wealthy, the wealth in an economy may be more equally distributed amongst its inhabitants via government programs, welfare, infrastructure spending, and social programs.
Beyond these points, there is a deeper, more fundamental question. When, if ever, is it morally justifiable to take from one to give to another?
Why Do Governments Levy Taxes?
To some, this is a simple question. The purpose of taxation is to build roads, equip an army for national defense, and provide for the common good through public programs such as education, social safety nets, and other such things. Taxes are a means to finance government expenditures.
If we all agreed on this, the debate over a wealth tax would be moot; government revenues continue to climb every year, and countries that have implemented a wealth tax have seen an increase in revenue of only 1%. It's clear, then, that the purpose of a wealth tax is not to raise money to finance the government.
The Importance of Intent
This raises an interesting question—does the reason behind a tax matter? Why do we levy extra taxes on, say, alcohol, cigarettes, and gambling winnings? Why do some countries impose an "exit tax" on those who give up their citizenship? Why are some items, such as food or medicines, subject to fewer or no taxes?
As a society, we agree to discourage certain actions via an artificially inflated cost because they are perceived as harmful. The taxes are punitive; we tolerate the existence of cigarettes, but we frown on their use. You may leave the country, but you must also part with half of your money. This is a middle ground between an outright ban; instead, people are nudged in another direction through the power of the purse.
Politics Is Downstream of Culture
This leads me to my next point, namely, that politics is a reflection of cultural and social attitudes. Take, for example, a country like Russia, a place where domestic abuse is rampant and domestic violence is not a criminal offense. When Russia fails to treat the abuse of women as a crime, it says something about the Russian people and how they, as a country, treat women. If women are valued, why are they not protected under the law? The law sends a message to the people that domestic violence is acceptable.
This same logic applies to a wealth tax. It should be clear by now that a wealth tax is a punitive tax. It is one that discourages the buildup of extreme wealth by punishing those who possess it. The tax raises no meaningful revenue; instead, it is a message to the people: wealth is immoral.
When I say that politics is downstream of culture, what I mean is that our social attitudes are reflected in the legal system that is shaped by that same society. Our American society looks down on drunkards, so we decide to tax alcohol. We believe in helping the environment, so we have tax credits for things like electric cars and solar panels.
Does It Matter?
At this point, an astute reader such as yourself might be thinking, "Well, this all comes down to if you think wealth is immoral or not."
Yet, this author posits that the question is irrelevant. Morality is a line that shifts so inconsistently from one person to the next that we will never agree on its definition, and thereby we will never agree to the answer to the question. Instead, the question is this: Does the government have a say in what is moral and what is not?
Are You Truly A Liberal?
Think carefully, dear reader, before you answer the question. Do you want your government telling you what is right and wrong, and legislating those morals into law? In other words, is the state the ultimate arbiter of morality?
This is the better line to draw in the sand. There are clearly defined principles here: Those in favor of a theocratic government, and those in favor of a liberal government. History is rife with examples of governments who took the liberty to dictate morality to their people. American slavery, Nazi genocide, universal suffrage—and these are examples from only the past century.
Is a wealth tax genocide? Of course not. But the same principles that justify a wealth tax have also been used to justify horrible evil throughout history. Government has enough power, why give it moral authority as well?
Inequality, Equity and Societal Duty
It is not the purpose of this article to examine the ethics of an unequal society. Indeed, it is both right and moral for those more fortunate to give to those in need. But a state is not moral; it serves as a framework for society, not the backbone of its virtue. When we cede moral authority to the government, we relieve ourselves of responsibility to our fellow man.
Do you wish to take care of those less fortunate than yourself? Look in the mirror.
Is a Wealth Tax Moral?
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