the problem with taxing the rich

[bentech]

is that the money got into their hands in the first place...

There is no reason to design an economy in such a way as to ensure that most of the gains from growth flow upward. Unfortunately, that has largely been the direction of policy over the last four decades.
We can ignore the inequities built into the way we have structured the economy and just try to tax the big winners, as is being proposed. However, there are two major problems with this route, one practical and one political.
The practical problem is that the rich are not stupid. They will look to find ways to avoid or evade the various progressive taxes being proposed. Both AOC and Warren have relied on advice from some top economists in describing their tax proposals, but even the best–designed tax can be gamed. (Is it worth $3 billion a year for Jeff Bezos to remain a US citizen? As a non-citizen he wouldn’t pay the wealth tax.)
Gaming the tax system will mean that we will collect considerably less revenue than a static projection would imply. It also will lead to the growth of the tax gaming industry. From an economic standpoint, this is a complete waste. We will have people designing clever ways to try to hide income and wealth, and in some cases getting very rich themselves in the process.
The political problem with going the tax route is that people attach a certain legitimacy to the idea that income gained through the market is somehow rightfully gained, as opposed to say, income from a government transfer program, like food stamps. The rich will be able to win support from many non-rich by claiming that the government has taken away what they have fairly earned.
By contrast, it is much harder for a drug company billionaire to cry foul because a drug developed with public funds, and selling at generic prices, has destroyed the market for his $100,000–a–year cancer drug. In the same vein, CEOs might have a hard time getting sympathy for the complaint that new rules of corporate governance make it easier to shareholders to bring their pay down to earth.
It is great that the rise in inequality seems likely to be a major topic in the 2020 presidential campaign. However, it is important that we think carefully about how best to reverse it.


Progressive Taxes Only Go So Far. Pre-Tax Income Is the Problem.

https://truthout.org/articles/progressi ... e-problem/" onclick="window.open(this.href);return false;