The socialist, globalist left’s ongoing effort to target and confiscate private wealth has crossed two major thresholds this year, bringing closer a future in which no person or business is safe from the prying hands of the world’s governments.
In one historic milestone, last week at the G7 in England, world leaders—including President Biden—endorsed the creation of a new worldwide tax regime, starting with a 15 percent global minimum tax on all companies. In a second key development, Congressional Democrats here in the United States are picking up steam for their proposals to impose a so-called “wealth tax” on American citizens, a tax based not on income, but on taking away a share of an individuals’ total net worth.
Taken together, these two measures represent a significant escalation in the progressive crusade to dramatically increase taxes and even to confiscate private property while ensuring there is nowhere else businesses or individuals can go.
The G7’s proposed global minimum tax would require all participating countries to impose a 15 percent levy on businesses. While this initial rate is significantly lower than the current business tax rates in many developed countries, the idea is to eliminate the competitive dynamics that force those countries to keep their tax rates relatively low. For example, Ireland’s 12.5 percent corporate tax was specifically established to attract overseas businesses, providing a significant boost to the Irish economy. This is the phenomenon the governments of the world are seeking to kill—presumably so they can eventually raise tax rates to a much higher level than the current system of competitive global commerce will sustain.
Indeed, the Biden administration is already seeking to raise business tax rates in the United States from 21 percent to 28 percent, and in so doing they face criticism that higher taxes will only succeed in driving businesses to lower-tax countries overseas.
Moreover, once a global tax regime is established, it will almost certainly grow beyond merely a minimum tax for businesses. It would only be a matter of time until the same global bureaucracies seek to globalize other kinds of taxes, from income taxes, to sales taxes, to potentially new forms of revenue collection that do not currently exist in the United States.
Exactly such concerns point us to the second major milestone the socialist, globalist left has achieved this year—mainstreaming the idea of a “wealth tax.” Last week, House Ways and Means Committee member Rep. Thomas Suozzi (D-N.Y.), revealed that he and members of his party are “exploring” a one-time tax on wealthy Americans to pay for the new spending priorities of the Biden Administration. The so-called “Patriot Tax” would confiscate 2.5 percent of the wealth of an individual whose net worth ranges between $50 million and $100 million and impose a 5 percent tax on wealth above $100 million. Rep. Suozzi insists this would be a one-time measure to help rebuild post-pandemic America, although rarely in history are entirely new categories of taxes ever phased out after being introduced.
While the concept of a one-time payment is new, progressive calls for a wealth tax have been percolating on the left for nearly a decade, since left-wing French economist Thomas Piketty released his work Capital in the Twenty-First Century in 2014. Piketty asserted that, without government intervention, wealth would inevitably concentrate with the wealthiest individuals. Interestingly considering the news out of the G7, Piketty’s solution was a Global Wealth Tax of 2 percent on all existing wealth, in addition to a progressive income tax that would reach 80 percent. One Washington Post columnist celebrated the work for “picking up” where Karl Marx left off.
Despite numerous issues raised over the accuracy and assumptions of Piketty’s scholarship, and the fact that the author himself believed that a global tax would be “politically impossible,” based on the current state of the Democrat Party in 2021, the notion of a global wealth tax seems much less far-fetched than it did in 2014.
Earlier this year, Senator Elizabeth Warren, alongside Senator Bernie Sanders, introduced the Ultra-Millionaire Tax Act which would impose an annual 2 percent tax on wealth over $50 million. While neither Warren’s bill nor Souzzi’s proposal is currently regarded as likely to pass, their existence shows that the idea has ascended to the realm of mainstream support within an increasingly leftist Democratic Party.
A recent analysis by the Tax Foundation concluded that a wealth tax would reduce the “long-term” GDP of America by .37 percent and could more than double the trade deficit. While the analysis is hypothetical, there are real-world examples that highlight other shortcomings of a wealth tax.
As of 1990, twelve European countries had imposed wealth taxes on their citizenry. As of 2021, only three remain. Among the most significant practical challenges is that many, if not most, people have a majority of their wealth in assets that are not easily convertible to cash in order to pay the tax. For example, farmers may own millions of dollars’ worth of equipment, but have little cash on hand. To cover the wealth taxes they would owe on such assets, they can be forced to liquidate the very assets their families or businesses rely on. Facing such choices in Europe, the best option for many was simply to move to another country. Should the G7 leaders see their “global minimum tax” realized, however, there will be a clear precedent for overcoming that problem, paving the way for the global wealth confiscation campaign Piketty dreamed of, but thought impossible.
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