Monday Miscellany, 11/13/23

Why the Wealth Tax Won’t Work

A wealth tax is an idea being promoted in progressive circles as a way to “soak the rich.”  Instead of just taxing incomes, a wealth tax would calculate the market value of people’s total assets and impose a tax on them year after year.

A number of countries have imposed wealth taxes, though most of those have subsequently dropped them.  They have never been tried in the U.S., where they would seem to be unconstitutional, constituting a “direct tax” in violation of Section I, Section 9, clause 4.  But some argue that states, if not the national government, would be free to impose them.

So Washington state is considering imposing a wealth tax, which would be projected to bring in $3.2 billion a year.  That’s not necessarily the reason, but the state’s richest resident, Amazon’s Jeff Bezos has just moved to low-tax Florida.  The third richest man in the world, Bezos is a political progressive, but a wealth tax would cost him $1.44 billion a year.  That’s 45% of what the state was planning to collect!

See Dan McLaughlin, Bezos Leaving Washington State for Low-Tax Florida and Dominic Pino, When Your New Tax Depends on One Taxpayer.

In addition to the legal and logistical problems, a wealth tax won’t work because it violates two principles:  (1) The maxim that if you want less of something, tax it, and if you want more of something, don’t tax it.  If you want more wealth in your state, don’t drive out the wealthy, who can afford to live anywhere they want.  (2) Aesop’s moral about killing the golden goose.

De-Banking “So That No One Can Buy or Sell”

I came across an article on a phenomenon I have only recently heard of:  de-banking.  A bank suddenly and without warning or explanation cancels a customer’s account.

See Why Banks Are Suddenly Closing Down Customer Accounts.  The story, originally in the New York Times but available at the link, tells about people trying to use a credit or debit card, only to find it rejected.  After a frantic call, they are told, “Per your account agreement, we can close your account for any reason at any time.”  The people this happens to aren’t told why and there is nothing they can do about it.  Says the article,

This isn’t your standard boot for people who have bounced too many checks. Instead, a vast security apparatus has kicked into gear, starting with regulators in Washington and trickling down to bank security managers and branch staff eyeballing customers. The goal is to crack down on fraud, terrorism, money laundering, human trafficking and other crimes.

In the process, banks are evicting what appear to be an increasing number of individuals, families and small-business owners. Often, they don’t have the faintest idea why their banks turned against them.

What seems to trigger this are large cash deposits or withdrawals, international wires to or from certain countries, or other transactions that algorithms find suspicious.

From the people interviewed in the story, though, some of them were guilty of no wrong doing.  A bad credit report will give reasons, which can be appealed and cleared up when there is a mistake.  Apparently, banks don’t have to give any information about the reason for their action.  (When an account is canceled, do the owners of the account get back the money they had in it?  The story doesn’t say.  Does anybody know?)

I’m worried about the “other crimes” referenced in the above quote.  First, this would seem like a case of punishing a crime without having been found guilty in a court of law.  If the bankers see evidence of illegal behavior, shouldn’t they notify the police, rather than presuming to impose a penalty themselves?

Second, I can see how the catch-all of “other crimes” could be expanded in all kinds of troubling ways.  Politically incorrect transgressions such as alleged “hate speech” that consists of disapproving of homosexuality is already criminalized in some jurisdictions.  But they wouldn’t have to be actual crimes, since losing your bank account is a sanction outside of the legal system.  If “we can close your account for any reason at any time,” the woke capitalists at your bank can punish anyone they wish.  And if you are unable to access your money or use your credit card, you are, in effect, erased from society.

De-banking seems tailor made for social control and religious persecution.  In fact, as we blogged about, missionary Andrew Brunson, who spent two years in a Turkish prison, said that he had been de-banked, as was former Kansas governor Sam Brownback, now involved in an international religious freedom initiative.  Perhaps this was because of international transactions with Muslim groups that a algorithm deemed suspicious rather than anti-religious persecution.

You don’t have to be a millennialist to be reminded of the Second Beast (the false prophet?) who requires both the rich and the poor to be marked, “so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name” (Revelation 13:17).  I had always assumed that this is symbolic, but now preventing people from buying and selling is technologically possible.