August 2, 2021
The quest to tax private wealth experienced two recent victories.
First, at the G7 meeting in England, world leaders (including President Biden) endorsed the creation of a new worldwide tax regime, starting with a 15% global minimum tax on all companies.
Their goal is to eliminate the competitive dynamics that cause low-tax countries to keep their tax rates low. For example, Apple was headquartered in Ireland at one point because of its 12.5% corporate tax rate. The Irish government specifically established that rate to attract overseas businesses, providing a boost to the Irish economy. This phenomenon is what governments of the world are seeking to kill, presumably to eventually raise tax rates higher than competitive global commerce can sustain.
In a second development, Democrats in the U.S. are picking up steam for their proposals to impose a wealth tax on Americans. This levy would effectively take away a share of a wealthy individual’s total net worth, regardless of their current taxable income.
Politicians are exploring this idea as a one-time tax to pay for the new spending priorities of the Biden administration. This “patriot tax” would take 2.5% of the wealth of an individual worth $50-100 million, with the rate increasing to 5% on those worth more than $100 million.
They insist it would be a one-time measure to help rebuild America. But new taxes, even “temporary” ones, rarely expire. Instead, they set precedent.
Taken together, these two measures represent a significant escalation to increase taxes and even confiscate private property. These moves ensure there’s nowhere else businesses or individuals can go to avoid higher taxes, save perhaps the moon.
Hopefully these ideas move no further. Otherwise, no person or business is safe from a government’s reach.