Modeling a Wealth Tax
There's a lot of confusion about taxes and wealth in this thread.<p>Suppose that I'm paying someone $100/week to get my iguanas polished.  If my taxes go up by $100/week, the obvious place for me to make it up is to stop paying to have said iguanas polished.<p>Is society better off?  It depends.  That said, the person who got that $100 from the govt is happier, but the iguana polisher is less happy.<p>As far as wealth taxes go, there's a similar effect.<p>Suppose that I have my wealth in a bank.  I owe $100 in wealth tax so I withdraw it and pay the govt, which then spends it.  Someone is happy because they got that $100.<p>But, what about that $100 I withdrew?  That's at least $100 that the bank can't loan.  The person who doesn't get that loan is less well off.<p>Okay.  So we don't tax bank deposits.  We'll tax stock.<p>Okay, so I sell $100 worth of stock to pay my stock wealth tax.  In other words, someone gives me $100 for said stock and I give $100 to the govt.<p>Where did that $100 come from?  Yup, someone decided to buy stock instead of paying her iguana polisher.  Again, the iguana polisher is worse off.<p>You may think that no one should have shiny iguanas. My point is that taxes don't create wealth.  They merely change where it is spent.