Property taxes certainly have issues; they tax building improvements, but we want those, so we shouldn’t be incentivizing people to not improve their buildings.
Land value tax is the proper way to go, questions of how to value land aside.
The issue with a wealth tax is it’s inflationary - most taxes are deflationary but a wealth tax forces you to sell assets to get their cash from them. It does encourage rich people to mark up their assets less, which might reduce apparent income inequality aka make poor people less jealous of them…
Couldn't you take loans against the value? I'm sort of assuming the wealth tax is a fraction of a percent, and that the burden would mostly be borne by high net worth individuals who could easily financialise their way out of small inconveniences.
Any tax on value is an eventual confiscation of the entire value given enough time, unless you have enough appreciation to outpace it (which likely is inflation).
There’s no way to borrow against a property to pay a 2% tax for mor than fifty years, for example. You need an outside source of funds, or appreciation.
> The issue with a wealth tax is it’s inflationary
If it encourages people to undervalue, or lower the value of something, I don't see how that's inflationary. Could you explain how it would be inflationary?
Because you can’t undervalue things with clear values like stocks. You have to actually sell them. The IRS doesn’t accept shares for taxes, it accepts USD. Selling -> increased money velocity -> inflation.
Lower asset values aren’t deflation because “asset inflation” isn’t inflation. You can’t eat assets and it doesn’t matter if their prices go up because you can buy fractions of them. Asset inflation (the theory that 2010 QE was causing inflation “in the stock market” even though we didn’t see it in goods) is a crank theory from online people who think central banks print money.
Land value tax is the proper way to go, questions of how to value land aside.
The issue with a wealth tax is it’s inflationary - most taxes are deflationary but a wealth tax forces you to sell assets to get their cash from them. It does encourage rich people to mark up their assets less, which might reduce apparent income inequality aka make poor people less jealous of them…