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It’s happening. California looks likely to put a “one-time” tax of 5% on wealth above $1 billion on the ballot in November, and polls suggest it could pass — despite opposition from some economists (not so surprising) and Democratic politicians (more so). Meanwhile, calls to tax the rich are resounding across the country, from New York’s proposed “pieds-a-tierre tax” to Washington State’s first-ever income tax, imposed only on millionaires.
As someone who has been arguing for more than a decade that these taxes are bad economics, I find all this disheartening. I missed the point. I thought the argument was about the optimal allocation of resources, but it is really about the redistribution of power. I concede that the concentration of power among the wealthy can be harmful. But using the tax code to fix it will create worse problems.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.