Will Rogers, a folksy humorist for those too young to know, once said that “a  Republican moves slowly. They are what we call conservatives. A conservative is a man who has plenty of money and doesn’t see any reason why he shouldn’t always have plenty of money. A Democrat is a fellow who never had any, but doesn’t see any reason why he shouldn’t have some.” Perhaps the quote is a bit dated today, perhaps it is a bit unfair, but it is satire after all. It calls to mind the latest tax proposal from Washington that would impose a wealth tax on unrealized gains for the very wealthy. Would it also include a yearly credit  for unrealized losses? Who knows? Is this an unconstitutional taking? Who knows? How would such a tax be administered? Who knows? Is it a cruel joke to drive planners, accountants, attorneys crazy? Who knows? One thing we do know is that there is a great inequality in the distribution of wealth in this country, but is this the way to address it? Let’s see what some experts are writing.

Tyler Cowen is a respected libertarian economist with a very popular blog called Marginal Revolution.[1] He makes one observation on the latest tax proposal and then cites to another respected economist, Aswath Damodaran, from NYU, and his analysis. First, Tyler:

“Put simply, this proposal is biased towards people with inherited wealth, invested in non-traded assets and mature businesses, and against people invested in publicly traded equities in growth companies, many of which they have started and built up. If that is the message that the tax law writers want to send, they should at least have the decency to be up front about that message, and to defend it.” marginalrevolution.com

Prof. Damodaran holds the Kerschner Family Chair in Finance Education and is Professor of Finance at New York University Stern School of Business. He is also a respected commentator on such topics and his analysis of the latest news from Washington is worthy of note. His website, Musings on Markets,  is also very much respected, at least according to family members in the field  (I wouldn’t know). See: aswathdamodaran.blogspot.com

A selection from Prof. Damodaran’s analysis:

If you have been tracking the torturous workings of the infrastructure bills working their way through Congress, consideration is now being given to a “billionaire” tax, focused on a extraordinarily small subset of Americans, and intended to raise tens, perhaps even hundreds, of billions of dollars in revenues, to cover the costs of the bill. I am constantly amazed by the capacity of legislatures to write bad tax law, but this one takes the cake as perhaps the worst thought-through and most ineffective attempt ever, at rewriting tax code. That is a little unfair, I know, because the details are still being hashed out, and it is conceivable that the final version will be redeemable, but given that the clock is ticking, I am not hopeful!

[1]  Disclaimer: I am not now nor have I ever been nor will I ever be a libertarian. However, the website is always interesting and worthy of following.