Wealth Tax

The biggest argument against a wealth tax is that wealthy people would just run away and move to another state or country, so the wealth tax would be useless and would hurt the economy. But that doesn’t make much logical sense. If they can move that easily, why would it be such a big deal? And why would they donate so much money to fight the implementation of a wealth tax?

The truth is that even with a wealth tax, many of them are not going to leave. First of all, the wealth tax rate is not that high. For billionaires, even taking away 10% of their net worth would not change their luxury lifestyle in any meaningful way. But for regular Americans, even a 5% reduction in benefits or a tax hike can be a burden they cannot absorb.

Also, tax rates are not everything. There are many countries and cities with much lower tax rates than the US. Hong Kong, for example, is known as a tax haven, but most US corporations still keep their headquarters in New York City or California. The reasons are the rule of law, business connections, human capital, and the broader ecosystem.

Big tech has been criticizing the Bay Area for the past 20 years, but they still haven’t left. That’s because most of their business connections are there. Florida and Texas have had much lower tax rates for a long time, but they have never been able to attract big tech at scale.

Tax rates are not everything. And if the rich were truly going to leave California or New York City just because of a wealth tax, they wouldn’t be fighting it and donating so much money for lobbying. They would simply move already. A wealth tax is not going to push rich people out.