In other words, wealth taxation would have taken resources out of the hands of Donald Trump in the 1990s, and put it into the hands of Jeff Bezos, Bill Gates or the other truly successful titans of industry. The result is that more of the accumulated capital of the U.S. economy would go toward building the companies of the future, instead of flowing into failed casinos.
It isn’t yet clear what the ideal form of wealth tax would be. Inheritance taxes are obviously important, since they seem more equitable, and since they put limits on how much incompetent heirs get to squander their parents’ fortunes on bad investments. But inheritance taxes alone wouldn’t have helped shift resources away from Trump in the 1990s. For that, some other, ongoing kind of wealth tax would be needed.
In any case, it’s clear that U.S. policy makers should be thinking about ways to partially substitute wealth taxes for traditional corporate income taxes. With that system in place, we might not find ourselves struggling to understand how people can get so rich from doing so badly at business.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
This article was provided by Bloomberg News.