| However, confiscatory taxes don't just run afoul of the Constitution, they also fail the basic test of sound economics. Global experiments with wealth taxes have all followed the same playbook, and the results are consistently destructive. No. 1: Capital Flight and Investment Declines Spain's 3% wealth tax led to a 20% exodus of millionaire capital within 18 months. Norway lost $3.4 billion in taxable wealth after a modest 1% increase. And France? Ten thousand millionaires left the country between 2002 and 2012 before the tax was ultimately scrapped. No. 2: Market Distortion and Illiquidity When people are forced to sell assets just to pay the tax bill, valuations get distorted. Investors turn to tax shelters instead of growth-focused ventures. And when assets are valuable but illiquid, taxpayers face liquidity crises. No. 3: Broad Economic Damage A 2% wealth tax in the U.S. would shrink GDP by more than 6% and eliminate over 1 million jobs within a decade. Wages would fall, capital investment would dry up, and the middle class - despite being "exempt" - would see an 8% drop in income. It's not just theory. In Spain, inequality didn't budge under the wealth tax, but the economy shrank 4.3% annually. That's not redistribution. That's destruction. We've seen this pattern before. The federal income tax was introduced in 1913 as a "modest" levy on the richest 1%, with rates starting at 1% and peaking at 7%. Fast-forward to 2022: the top 1% still pays more than 40% of all income taxes. Yet middle-class households now face: - Marginal rates over 22% on income above $89,450
- 15.3% payroll taxes, capped only for Social Security
- Nearly 10% in additional state and local taxes in high-tax states
How did that happen? Three mechanisms... - Bracket creep. Inflation quietly pushes taxpayers into higher brackets.
- Base broadening. Deductions get eliminated (as in 1986), making more income taxable.
- Rate normalization. "Temporary" tax hikes (like those in WWII) become permanent.
The income tax started as a tax on the wealthy. It's now a system that hits the middle class harder than colonial taxes ever did relative to income. It's not unlikely that the same thing would happen with a wealth tax, hitting first billionaires, then millionaires, then the rest of us. We're told billionaires don't pay their "fair share." The data says otherwise. In 2022 - the last year that data is available - the top 1% paid $749 billion in federal income taxes. That's more than the bottom 90% combined. When you add in state taxes, capital gains, estate taxes, and corporate taxes (which shareholders ultimately pay), high-income households face an effective tax rate between 40% and 55%. Confiscatory taxes don't make the system fairer. They make it less efficient and more punitive. That isn't just an unsound policy - it's a violation of the property rights on which this country was built. Rather than chasing wealth taxes that are almost certainly unconstitutional and economically counterproductive, Congress should do what it rarely does: simplify the existing tax code, broaden the base through economic growth, and keep America competitive in global capital markets. The Constitution's limits on direct taxation weren't written by accident. They reflect a deep understanding that prosperity is driven by protecting individual rights - not punishing success. That's the real way to build a stronger, freer, and more prosperous America. Good investing, Alex | 
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