Essentially, a lot of art would be removed from circulation, stored in warehouses largely for tax reasons. Along the way, Christie’s and Sotheby’s might go bankrupt, as well as many art galleries, as the demand to buy art would plummet. You may think that the demise of a few galleries and auction houses is a small price to pay to reduce wealth inequality. But consider that artists, too, need to make a living.

And all of this is considering only the wealth tax and its particularly striking effects. There are other tax-law decisions that affect the nonprofit sector. If the U.S. restores the corporate income tax rate to what it was before 2018, for example, it could induce more hospitals to switch back to a nonprofit status — to lower their tax burden. That might not be good for patients, since over time for-profit hospitals have proved to be more effective competitors, while nonprofits do not do a significantly better job caring for the poor.

The U.S. has created the most dynamic and effective nonprofit sector in the world. It rests on a delicate balance of private support and some indirect (not too much) government subsidy. America interferes with that balance at its peril.

This article was provided by Bloomberg News.

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