Modeling a Wealth Tax
There's a lot of confusion about taxes and wealth in this thread.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.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.As far as wealth taxes go, there's a similar effect.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.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.Okay.  So we don't tax bank deposits.  We'll tax stock.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.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.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.