The wealth tax, a subject that is highly criticized but also praised by many who consider it the solution to the economic problems or crisis that a country may be going through. Recently in the U.S., a group of Democratic legislators led by Senator Elizabeth Warren introduced a bill proposing an annual tax on individuals and trusts worth more than $50 million, including the value of assets such as real estate and stocks.
But, before giving any opinion, it is worth asking Would it bring any real solution if this law were to be applied in the country with the largest per capita population of millionaires in the world? Well, to find out we have to listen to the arguments of both sides and also see what has happened in the places where this law has been applied (Spoiler, It is useless.) But we also have to know exactly what is the Wealth Tax they want to apply.
The wealth tax is a tax applied to individuals, it is not applied on the annual income or transactions of the subjects, but on the personal wealth, and it is calculated based on the value of all the assets of the subject. In other words, not even buying gold or mansions can escape this law.
But taxes are not bad if they are applied in a fair measure, since they help a country to function properly because the state can obtain the resources to provide education, health, security, justice, public works, fight against poverty and boost the economic sectors that are essential for the growth of the country's economy. That is why those who support the wealth tax in the U.S. say that this law will make a very positive change, since it would mean more than 300 billion dollars a year, which can be used for education, health and public works.
But also, excessive taxation affects the economy in many ways. It is quite indisputable that they reduce investment, the engine of economic growth in both the short and long term, as well as increase the unemployment rate. Therefore, those who disagree with the implementation of this law mention that it would do more harm than good, as it would affect the property landscape in the U.S. stock market and ultimately diminish the value of everyone's savings.
That is why it is convenient to see what has happened in Argentina, a country where this law was applied due to the enormous economic crisis the country is going through. But let's remember that, as in the United States, this law is gaining strength due to the disastrous results that the pandemic has left in the Argentine economy. In addition, the government of Argentina thought that this law would help to strengthen the fiscal front after eight months in which the State allocated millions in aid to the private sector to alleviate the economic effects of the restrictions imposed to combat the advance of the coronavirus.
But what has been the result in Argentina so far? Well, because they have applied high taxes, the situation has not changed at all, inflation continues to increase like a fire in a meadow in drought, the confidence of large investors is disappearing and along with that the foreign investment in the country, the economic contraction will be worse for this 2021 and in the next wave of coronavirus that is about to arrive it seems that the Argentine economy will remain in the red. But one thing it has done is to help corruption to grow stronger.
In the case of the United States we have a situation similar to that of Argentina, an economy badly hit by the coronavirus, an inflation due to an uncontrolled impression of money, the country with more deaths and cases of contagion in the world and a high rate of unemployment. The state at this point can no longer subsidize the economy any more than it does, as it would negatively affect it, so the idea of taxing millionaires and collecting more tax money to help the economy recover sounds incredible.
The wealth tax proposal would be applied in this way:
2% annual tax on the net worth of any household between $50 million and $1 billion.
3% tax for those with more than $1 billion.
And if we make calculations according to what forbes magazine and the government's analysis on the matter let us know, we are talking about a lot, a lot of money because the United States concentrates the largest population of millionaires in the world, approximately 100 thousand people with net worths that exceed 50 million dollars.
Now, you may think that if you have your money in crypto the government can't take it away from you, but this is as true as it is false. Since there are many problems involved and also lately many projects are being presented to tax cryptocurrencies, so *what Benjamin Franklin said is absolutely right, nobody is saved from death and taxes.
The problems with cryptocurrencies and billionaires is that cryptocurrencies are a fully transparent financial asset," said Tim Byun of the OKCoin exchange: It's silly to think that they (as well as anyone else) will look to Bitcoin as a way to "hide" their wealth, given that Bitcoin leaves a permanent digital footprint. So you can't hide a multi-billion dollar purchase without anyone knowing about it.
But maybe you can think about buying Bitcoin on platforms with headquarters outside the United States to avoid the rigorous KYC and anti-money laundering requirements, but the truth is that there are serious risks related to delivery and custody, and seeing that the money is at risk with cryptocurrency purchases, it seems that they are more than discarded, since they would not be viable options to avoid paying taxes.
But it can not be ruled out completely, because also millionaires are interested in preserving the value of their wealth and as cryptocurrencies have that favor point, if they decided to invest in crypto assets would help to avoid the stagnation of the gains of more traditional assets.
Anyway, there are points for and against the application of wealth taxation in the richest country in the world, there are also difficulties in case these ultra-rich want to transform their fortunes into cryptoassets. So when you see all this you can clearly notice that having so much money and fortunes does not give you a true happiness (I mean a full or complete happiness), because even though you can have everything and you do not lack anything, you live in constant anguish because there will always be someone who wants to take it from you, either the tax authorities or people who yearn for what others may have.
Attention: with this I am not saying that having money is bad or that you should not look for it, NO, what I am trying to say is that having money also implies going through problems such as taxes, which leave many people very unhappy.