The Never-Ending Economic Tragedy of Argentina

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I’m tempted to say the big takeaway from today’s column is that wealth taxes are a bad idea.

That’s true, of course, but the bigger lesson we should absorb is that a rich nation can become a poor nation.

Simply stated, if a government imposes enough bad policies – as has been the case in Argentina – then it’s just a matter of time before it declines relative to nations with sensible policies.

Author(s): Dan Mitchell

Publication Date: 10 July 2020

Publication Site: International Liberty

San Francisco wealth tax will fuel next blue exodus for rich earners

Link: https://thehill.com/opinion/finance/527731-san-francisco-wealth-tax-will-fuel-next-blue-exodus-for-rich-earners

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That is what happened in San Francisco, where voters passed a wealth tax beyond efforts for the state or federal level. It is described as an “overpaid executive tax” which would apply to those firms in the city which pay their officers more than 100 times the median worker salary. While decisions on whether to enact tax hikes are best left to local residents instead of to the bureaucrats in Sacramento or the District of Columbia, the new wealth tax in San Francisco could now create unintended negative effects, including a significant exodus of rich earners who move out of the city.

The Bay Area is home to the widest income gap in California. Those local residents in the top 90th percentile earned over 12 times more than those local residents in the bottom 10th percentile. The combination of historic market policies and current socialist policies established such separation of classes in the state. The success of the technology industry in tandem with high tax rates and building restrictions created this situation where someone could earn over $100,000 a year and live in his car.

Author(s): KRISTIN TATE

Publication Date: 27 November 2020

Publication Site: The Hill

A California Plan to Chase Away the Rich, Then Keep Stalking Them

Link: https://www.wsj.com/articles/a-california-plan-to-chase-away-the-rich-then-keep-stalking-them-11608331448?st=eciwz3atsygqzun&reflink=article_email_share

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California’s Legislature is considering a wealth tax on residents, part-year residents, and any person who spends more than 60 days inside the state’s borders in a single year. Even those who move out of state would continue to be subject to the tax for a decade — a provision that calls to mind the Eagles’ famous “Hotel California” lyric: “You can check out any time you like, but you can never leave.”

The California Constitution probably allows a statewide wealth tax on residents, but any effort to create a tax capable of reaching across state borders is likely to run afoul of the U.S. Constitution. Taxing someone who spends only 60 days in the state in any single year — and extending that tax over an ensuing decade — would be something new under the sun.

Author(s): Hank Adler

Publication Date: 18 December 2020

Publication Site: Wall Street Journal

‘Terrible Idea’ with ‘Dismal Track Record’: Top Economists Blast Elizabeth Warren’s Latest Proposal

Link: https://fee.org/articles/terrible-idea-with-dismal-track-record-top-economists-blast-elizabeth-warren-s-latest-proposal/

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In fact, wealth taxes have failed across the world where they’ve been tried.

“Warren’s proposal has a dismal track record in other countries that have attempted wealth taxation,” Senior Research Fellow at the American Institute for Economic Research and economic historian Phil Magness warned. “It simply encourages the wealthy to relocate abroad, taking their businesses with them.”

Economists say that’s why the global trend has not been passing wealth taxes, but repealing them. Edwards pointed out that in 1990, 12 European countries had wealth taxes. Now? Just three still do. 

“Even most of the leftist welfare states in Europe have repealed their wealth taxes because of the complex administration, the negative impacts on growth, and the encouragement of avoidance and evasion,” Cato’s Edwards concurred. 

Author(s): Brad Polumbo

Publication Date: 4 February 2021

Publication Site: Foundation for Economic Education