Felix Salmon at Reuters has a post up this afternoon that asks why the Wall Street Journal is referring to the proposal to place a surtax on various levels of income as a wealth tax. He contends it’s an income tax and I would have to agree with him.
I don’t know why the WSJ would call it a wealth tax. As you know, a wealth tax is just a tax on your accumulated wealth. For instance you might have been a very successful something or other and worked hard and accumulated a lot of money even after you paid income taxes. You invest wisely in stocks, bonds, collectibles and maybe real estate and after twenty or thirty years you are a very wealthy person. Then the government finds itself strapped for cash and decides that they will institute a tax on the net worth or wealth of everyone above a certain level. Presto, you get nailed again.
Felix sees some merit in this idea:
This is an income tax, pure and simple, not a wealth tax. Personally I think a modest wealth tax, in conjunction with an income tax, makes a certain amount of sense. Why tax income, which people work hard for, but not unearned wealth? But in any case, this isn’t a wealth tax, and I don’t understand why it’s being characterized as one.
I’m not quite sure what constitutes unearned wealth. It seems to me the only way to accumulate wealth is to earn it via hard work or diligent investing but what do I know.
Anyway, how would you feel about a real wealth tax?