My Turn: What progressives won’t tell you about the wealth tax

For the Monitor
Published: 1/13/2020 6:16:10 AM
Modified: 1/13/2020 6:15:25 AM

A wealth tax equals high youth unemployment. Don’t take my word for it – just find the countries in Western Europe that had a wealth tax and see what the unemployment rate is today for the 19- to 26-year-olds.

In countries such as France, Greece, Portugal, Italy and Spain, the unemployment rates are in the double-digit range. Of the 14 countries that tried the wealth tax, only four of them still have it today because the tax never raised the amount of money the politicians said it would.

The same will happen with what the progressive candidates are telling us in this presidential campaign.

Unfortunately, the empty promises made by these same politicians of free tuition, health care, etc., will be difficult to rescind when the tax money is not there to fund these empty promises.

In the first Democratic debate, John Delaney warned that a wealth tax will not only not produce the income estimated but it will chase that capital of innovation to other parts of the world.

Unfortunately, again no other candidate nor the commentators in that debate addressed that dynamic in the wealth tax.

Delaney, in the first debate, was the only presidential candidate who had any experience and was successful at employing risk capital in our free enterprise system. All the others were career politicians who will not tell us the truth about how our free enterprise system works and how it creates a free and prosperous middle class in our country.

Let’s look at the people who the progressives want to tax and where that wealth came from.

Take the richest man in the world today, Jeff Bezos. He has an estimated net worth of about $112 billion, mostly reflected in the price of the stock of the company he created from nothing, Amazon. That stock is valued at over $1,800 per share today.

When Bezos started Amazon, he left a lucrative career in New York City and set out across the country to fulfill his dream of being successful at selling books online. Through his innovation and risk taking, he made Amazon what it is today, the largest online seller of goods and services, including a subsidiary, Amazon Web Services, which has become the foremost cloud computing platform.

This innovation is a far cry from his initial dream of selling books online.

In 2006 Amazon stock had an average asking price of a bit over $36 per share. It was through his innovation, hard work and a passion for excelling that the world recognized his innovative skills and increased the value of Amazon stock to what it is today.

Today, middle-income families saving for their children’s college education and retirement have substantial value in their 401ks and IRAs because the mutual funds they have in their retirement accounts invested in Amazon stock. This is the same for teachers, police and firefighters’ retirement funds. If we elect any of these progressive candidates who propose a wealth tax, the only readily available way for that tax to be paid is by billionaires like Bezos having to sell their stock to pay the tax. This wholesale selling of the stock by him and other innovators like Bill Gates of Microsoft will significantly reduce the value of that stock thereby reducing the values of middle-income providers and teachers’ retirement funds.

A decrease in the value of these funds in New Hampshire will put a heavier burden on our taxpayers to compensate for the lost value in the teachers’ retirement fund. But the progressives will not tell you about the unintended consequences of this wealth tax.

Then there is the disingenuous comment from Sen. Elizabeth Warren that all she is asking for is 2 cents above $50 million for them to give. It is not 2 cents. It is 2% of all their wealth above that threshold amount. That 2% value is about $375 billion per year. So, if Delaney is correct, and I believe he is, innovative capital will leave America and go where it is treated better, like to Southeast Asia.

The people of Southeast Asia believe in the American Dream through a strong work ethic, and that is the environment where innovative capital is treated best.

The 10 countries in Europe found out that wealth capital taxed after it was taxed when earned does not stay in those countries. That is why they eliminated the tax.

Young voters, do not be led to believe the false promises that you can have something of value for nothing. Someone has to pay for it. My concern for you is that the billionaires will pay for it for a while. But ultimately, we all will pay for these promises with the loss of our freedom. We will become dependent on government for our needs and that dependency will make us all servants of a state.

The state will have to tax the wages and salaried workers in the middle class to try to fund those promises.

Wealth capital is mobile but W-2 and 1099 wage earners are not mobile. So, we will have the only incomes left to tax.

Again, do not take my word for this eventuality. Just look at the condition in Greece, Italy, Spain and the other countries in the European union who adopted this crazy wealth tax.

Don’t vote for any candidate who proposes this wealth tax. We will pay for it in the long run.

What the progressives will not tell us is that we can’t narrow the income inequality gap by making the innovators at the top poorer and giving us a fish. Real meaningful narrowing of that gap means teaching the people at the lower end of that gap how to fish so they can provide for themselves.

(Joe Mendola lives in Warner.)

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