How a Wealth Tax Would Increase--Not Decrease--Investment

Today’s New York Times came up with a scoop. In a story that ran on the front page, the paper reported that the rich don’t like wealth taxes—which are key platform planks for Senators Bernie Sanders and Elizabeth Warren.

That said, the rich and their defenders have realized they can’t oppose such a tax on the grounds (however true) that they want still more money, and the power and perks that come with it. Instead, they argue that taxing wealth will curtail the investment that America needs to keep its economy humming.

“You’re going to completely disincentivize capital investment, which is going to be very, very bad for economic growth,” Treasury Secretary Steven Mnuchin (a multimillionaire) told the Times. Harvard’s Larry Summers, in an article co-authored with Natasha Sarin of the University of Pennsylvania Law School, argued that “[t]urning the tax code into a vehicle for confronting what some call ‘oligarchic drift’ would undermine business confidence, reduce investment, degrade economic efficiency and punish success.”

Summers, however, didn’t explain how even with massive capital accumulation by the top one-tenth of 1 percent, and without a wealth tax, America had somehow lapsed into the “secular stagnation” he has long contended ails the nation’s economy—an ailment chiefly characterized by a deficiency in capital investment.

Read more: https://prospect.org/blogs/tap/how-a-wealth-tax-would-increase-investment-sanders-warren/
(American Prospect)