Warren’s ‘wealth tax’ will trickle down

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I’d like to take issue with some statements that were made by Mr. Baum regarding “Warren will provide a fix for Wall Street.”

I can only assume that Mr. Baum’s describing investing in the stock market as “gambling” must be a result of Mr. Baum’s personal experience since it would have been hard to not profit quite handsomely by investing in stocks over the last 10 years. In fact, an investment in simply the index that tracks the stock market — not even investing in individual stocks — would have enabled him to more than triple his investment during that time and that does not include dividends, which average roughly an additional 2% per year.

Regarding profiting through stock market investing by “stumbling on access to a Wall Street broker” or a broker who has “insider information” — one would not have even needed a broker at all to enjoy those outsized returns — one could have simply bought the index online. Regarding Baum’s comment about brokers’ commissions being “enormous,” commissions at many brokerage firms have been completely eliminated.

I won’t go into how investing in dividend-paying blue chip stocks with strong balance sheets could have equaled or exceeded the returns of the index, but one would have hardly needed to stumble upon a wall street broker or to have “insider information” to invest in those types of companies. In fact, investing on insider information is often leads to losses, not profits.

Regarding Senator Warren’s “fix,” it’s naive to think that Warren’s “wealth tax” will not trickle way down the economic spectrum. I wonder how Mr. Baum would feel about giving the government 2% of his net worth every year, since it’s likely that he’ll have to do that. All one needs to do is to look at the history of taxation in the U.S. It always starts with the wealthy, and it always moves down the line to everybody else. Given Senator Warren’s proposals for many trillions of dollars of new spending, she’ll be forced to do it.

Aside from that, trying to calculate an individual’s “wealth” is highly problematic. Does anybody think that people won’t reduce the estimated value of their homes, rental properties, their own business, etc. in order to reduce their tax burden? Is the government going to retain a cadre of appraisers in order to determine the value of every taxpayer’s assets?

Six countries that instituted a wealth tax have discontinued it for many or all of the above reasons, and that includes Denmark, Sweden, and Germany. So much for Warren’s “fix.”

Marshall Friedman, Whitefish

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