Thomas Piketty’s proposal for a global wealth tax has been attacked on both the Right and the Left.
It’s been attacked on the Right—for example, by Tim Worstall—because it won’t work.
Our problem is that a wealth tax can either be set at a rate at which it can be paid out of income, in which case it’s not actually going to reduce wealth disparity, or it will be set at a rate at which rich people must liquidate their portfolios to pay it, and if all rich people have to do that then who in heck can they sell to?
And from the Left—for example, by David Harvey—because it is considered “naïve if not utopian.”
But both sides proceed as if the proposal for a tax on wealth is a new phenomenon, something that Piketty invented in his best-selling book.
As it turns out, while working on a new research project (on “Utopia and the Marxian Critique of Political Economy,” for a conference in November), I chanced upon a much earlier discussion of wealth taxes: a speech given by Friedrich Engels on 8 February 1845 in Elberfeld.
Engels explained that communists had no intention of introducing “common ownership overnight and against the will of the nation.” Still, he argued, it was possible to move in the direction of “practical communism” by adopting certain measures—such as “general education of all children without exception at the expense of the state” and “a complete reorganisation of the Poor Relief System.” He then added:
Both these measures require money. In order to raise it and at the same time replace all the present, unjustly distributed taxes, the present reform plan proposes a general, progressive tax on capital, at a rate increasing with the size of the capital. In this way, the burden of public administration would be shared by everyone according to his ability and would no longer fall mainly on the shoulders of those least able to bear it, as has hitherto been the case in all countries. For the principle of taxation is, after all, a purely communist one, since the right to levy taxes is derived in all countries from so-called national property. For either private property is sacrosanct, in which case there is no such thing as national property and the state has no right to levy taxes, or the state has this right, in which case private property is not sacrosanct, national property stands above private property, and the state is the true owner. This latter principle is the one generally accepted — well then, gentlemen; for the present we demand only that this principle be taken seriously, that the state proclaim itself the common owner and, as such, administer public property for the public good, and that as the first step, it introduce a system of taxation based solely on each individual’s ability to pay taxes and on the real public good.
Almost 170 years later and we’re still battling over the principle of taxation.