A Tax On Eli Broad Is a Tax On Every Single American
“I can afford to pay more, and I know others can too.” Those are the words of billionaire businessman and philanthropist Eli Broad in a recent opinion piece written for the New York Times. As is well-known now, Broad is very publicly endorsing a wealth tax that would be levied on superrich individuals like himself. He unwittingly explains why such a tax would be so harmful.
As Broad makes plain, he has enormous amounts of unspent wealth that would make a higher tax bill easy to pay. Broad’s unconsumed wealth rates serious thought when it’s remembered that there are no companies and no jobs without investment first. It’s all a reminder of the singular importance of the ultra-rich when it comes to economic growth: they have millions and sometimes billions that they haven’t consumed, and that they must allocate. Short of stuffing the wealth under a mattress, those abundant funds have the potential to be invested in today’s and tomorrow’s companies.
Better yet, Broad’s comment that he can afford to pay more taxes is another way of the multi-billionaire saying that he has enormous amounts of money that he can lose without it hurting. This is particularly crucial for economic progress when it’s remembered that so many innovations are the result of surprise born of intrepid investing. People like Broad have the means to take investment risks that most of us cannot precisely because they fail much more often than not. At the same time, these courageous capital allocations also have the chance to transform how we live. Hard as it is to imagine now, lightbulbs, cars, airplanes, computers, internet and search engines were only obvious after the fact. With their unspent wealth, the rich really and truly move the future into the present.
Unfortunately, it’s not just job creation, experimentation and discovery that suffer when the richest of the rich pay more in taxes. To be clear, no one is spared when the rich hand over more to the government.
To see why this is true, it’s worth remembering that governments don’t collect taxes only to stare lovingly at the dollars we send to them. More realistically, every dollar taxed away amounts to extra control over the economy by politicians. Governments don’t have resources as much as they use their taxing power to influence the direction of resources, often in political fashion.
This is why those in favor of limited government do the cause no favors when they encourage those who feel undertaxed to voluntarily overpay. Every extra dollar that flows to the U.S. Treasury expands the influence that politicians have over the economy. This is an economy-sapping burden we all bear.
Which brings us to arguably the most contradictory aspect of the wealth tax movement. Though billed as a way to equalize great differences in wealth, proponents of the wealth tax ignore that surging inequality over the decades has coincided with plummeting gaps between the rich and poor in terms of lifestyle. Just about every common good that we take for granted today (computers, mobile phones, and air conditioning to name but three) was once extraordinarily expensive. No doubt inequality has soared in modern times, and the inequality has been a consequence of entrepreneurs mass producing former luxuries.
Broad and other billionaires are begging us to redistribute their wealth to those who have less, but it’s often thanks to billionaires that today’s poor and middle class have access to goods that even the richest of the rich couldn’t imagine owning not too long ago. A wealth tax would limit the amount of capital being matched with entrepreneurs, and the losers in such a scenario will be poor and middle earners through reduced job opportunities, and slower access to comforts presently only enjoyed by the very well-to-do.
In short, readers shouldn’t be fooled by billionaires seeking saint-like status through overpayment of taxes. No one gains when politicians get more. With taxes, there’s no such thing as “others.”