We at Democracy have tracked recent arguments around wealth taxes, but felt there’s an almost philosophical question underlying these scholarly questions. Is the goal of optimal tax policy to create revenue, to create a fair distribution of wealth across society, to enhance economic growth? And does this debate go beyond economics and funding government and into the health of our democracy with such concentrated wealth? To consider some of these questions, we enlisted three experts to debate what our tax and inequality problems actually are, and what policies would solve them.

America Needs a Wealth Tax

Amy Hanauer & Igor Volsky

America has a billionaire problem. When just 300,000 households control $40 trillion, more than five times what the federal government spent last year, the result is the systematic purchase of our democracy, the manipulation of essential markets, and the degradation of the social fabric that holds our country together.

Beyond a certain threshold, extreme wealth ceases to be a private matter and becomes a public threat. In a democratic society, our responsibility is to build a system that corrects this policy failure—not to punish the ultra-wealthy, but to prevent a tiny elite from wielding coercive power over everyone else’s lives.

Just look at Elon Musk, who secured unprecedented influence within the Trump White House after donating more than $250 million to Donald Trump and other Republicans. During his tenure atop the Department of Government Efficiency (DOGE), Musk appears to have leveraged his power to benefit his businesses on dozens of occasions while receiving markedly favorable treatment from federal agencies, which ended regulatory actions that threatened Musk’s companies with $2.3 billion in potential liabilities.

Musk may be the most flamboyant billionaire to use his money and power to shape policy outcomes in his favor, but he’s certainly not alone. Just 100 ultra-wealthy families spent upwards of $2.6 billion on the 2024 federal elections, making up one of every six dollars spent overall. This was more than double the amount that individual billionaires spent in 2020. Billionaire political spending has risen 160-fold since the Supreme Court’s 2010 Citizens United decision, which allowed for unlimited independent political spending by outside groups and led to the rise of super PACs funded by the ultra-rich.

Billionaires’ investment in the 2024 elections paid off handsomely with the passage of Trump’s so-called One Big Beautiful Bill. More than 70 percent of the net tax cuts in that bill will benefit the richest fifth of Americans in 2026, while the richest 1 percent will receive an average net tax cut of $66,000. And the payoff isn’t just in tax breaks. Industries like cryptocurrency and artificial intelligence, which funneled millions to influence the 2024 election and where billionaire donors are heavily invested, are now enjoying deregulation and favorable legislation and executive orders. (Public safety and economic stability be damned!)

Zooming out, one analysis concluded that for every dollar a corporation spends on lobbying, it receives $220 in tax benefits. (The top 1 percent of Americans own roughly 29 percent of all corporate stocks and bonds, so when corporations win policies that protect and boost profits, the ultra-wealthy disproportionately benefit.) When advocacy groups led by the Koch brothers spent more than $20 million promoting Trump’s 2017 tax bill, the expenditure paled in comparison to the sum that the Kochs stood to save in income taxes: up to $1.4 billion each year. Meanwhile, a comprehensive study examining the relationship between voter preferences and policy outcomes in the 1990s found that the wishes of average voters have a near-zero impact on policy, while economic elites and organized business interests wield far greater influence.

This imbalance of power isn’t confined to the halls of Congress. Extreme concentrations of wealth also sustain the industries that are heating our planet and distort the housing and health-care markets. The ultra-wealthy are not just getting rich; they’re making life’s essentials more expensive and lower quality for everyone else.

Consider the role of private equity. While private equity is capitalized by numerous sources, the biggest private equity firms—such as Blackstone, Apollo, KKR, Thoma Bravo, and Ares—are owned and directed by billionaire founders and executives. These individuals have amassed multibillion-dollar personal stakes in their firms and exercise direct control over investment strategies, giving them unmatched leverage over the outcomes and profits associated with private equity’s expansion into housing, health care, and other vital markets. In contrast to public companies, which are typically more passively managed and more tightly regulated, companies owned by billionaire-led private equity firms actively pursue deals that boost short-term returns, often at the expense of affordability and community stability.

Private equity firms currently own at least 1.6 million housing units in the United States and deploy aggressive revenue-maximizing tactics to generate significant returns for their investors while increasing costs for families. Many of the metropolitan areas where private equity landlords own a large share of apartments—Tampa, Phoenix, Dallas, Atlanta, and Charlotte—have experienced sharp increases in rent. According to industry forecasts, private equity firms are projected to own 40 percent of single-family rental homes by 2030, or 7.6 million properties.

We see this same pattern of financialization in health care, with private equity firms reshaping the landscape at the direct expense of workers and patients. Private equity firm Apollo Global Management now owns two of the largest hospital systems in the United States and controls 235 hospitals across 37 states. Under Apollo’s ownership, hospitals have been burdened with sky-high debt, reduced staff, and degraded essential services, including OB-GYN and pediatric care. Many Apollo-owned hospitals have well-documented regulatory violations and numerous reports of underpaid staff and dangerous conditions for patients.

Ultra-wealthy investors—often working through private equity—are also driving the climate crisis. Private equity firms have injected about a trillion dollars into fossil fuel companies since 2010, amassing vast energy portfolios with enormous climate footprints. Just 21 firms are responsible for an estimated 1.17 gigatons of annual emissions. If included on a ranking of countries by greenhouse gas emissions, together these 21 firms would be the world’s fifth largest polluter, just after Russia.

But extreme wealth is not only distorting important markets and poisoning our planet. It’s also contributing to the inequality that makes everyone sicker, more anxious, and less trusting. Higher inequality directly correlates with increased rates of homicide, imprisonment, obesity, and drug abuse. Our life expectancy declined from 2014 to 2017 partly due to “deaths of despair,” and the United States consistently shows higher infant mortality than most developed nations. Countries in Western Europe—which have lower levels of income inequality—consistently achieve better outcomes in health, education, social mobility, and public safety than the United States, where disparities by region and economic class mean life expectancy and social well-being can differ dramatically depending on where someone lives and their income.

Simply put, we need direct wealth taxation to break up dangerous concentrations before they break us. Multiple policy approaches exist, from wealth taxes to inheritance reform. But the principle is clear: No individual should accumulate so much wealth that they can buy power over democratic institutions and essential systems.

A wealth tax targeting the ultra-wealthy could generate substantial revenue while slowing the rate at which our economy mints new billionaires. The proposed “Five and Dime” tax—5 percent on wealth over $50 million, 10 percent on wealth over $250 million—would raise $6.8 trillion over ten years. (The measure was conceived and promoted by the Tax the Greedy Billionaires campaign, which one of us runs.)

This revenue could fund affordable child care, expanded housing, infrastructure investment, and climate initiatives and would tackle inequality by reducing the amount of wealth held by the richest Americans and directing the resources raised to help poor and working-class families with basic expenses. Just as importantly, it would prevent the kind of wealth concentration that transforms economic success into political dominance.

Americans should be free to pursue financial success. But when a tiny elite amasses so much wealth that they can override democratic institutions and distort markets, they block opportunities for working families and small businesses while putting our nation’s long-term growth at risk. The issue isn’t wealth itself—it’s wealth so extreme it buys power over everyone else’s lives. Policymakers must rein it in and tax it back to levels compatible with democracy.

Wealth Taxes Are a Dangerous Distraction

Ben Ritz

I wholeheartedly agree with Igor Volsky and Amy Hanauer that economic inequality is a problem and that better policy can help solve it. I agree that the ultra-rich must pay more in taxes at a time of ballooning budget deficits. And I agree that the Trump Administration has allowed wealthy Americans to buy political influence, causing untold damage to our democratic institutions.

But billionaires are not responsible for every social and economic ill facing America today, as Volsky and Hanauer all but assert. And their proposed solution to this problem—a “Five and Dime” wealth tax—would be an economic disaster that is difficult to administer and likely to raise far less revenue than they claim. What we need instead are real solutions to our social and economic challenges.

It is undoubtedly true that wealthy Americans enjoy some unfair advantages in our political process, as Volsky and Hanauer claim. Politicians spend too much time in rooms with big donors, begging for checks and listening to their concerns more than those of ordinary Americans. That needs to change, but this is a problem to be solved with campaign finance and government ethics reforms, not a radical upending of our economic system. Furthermore, individuals worth a “measly” $50 million are still perfectly capable of making massive campaign contributions, so politicians’ incentives would not materially change even if all wealth above this threshold were taxed out of existence.

Volsky and Hanauer don’t just charge billionaires with our political dysfunction; they hold billionaires responsible for nearly every other problem in American society. For example, they blame climate change on wealthy investors, citing a dramatic statistic about carbon emissions linked to private equity firms. But this measurement is based on faulty accounting. Under the methodology used, when a driver fills up the gas tank on his pickup truck, the resulting emissions are attributed not to the driver, but to investors in the firm that supplied the oil. In reality, big companies don’t cause most emissions—they just respond to consumers’ demand for energy and transportation.

So as long as fossil fuels remain the cheapest way to fulfill our energy needs, targeting investors will do nothing to curb our carbon footprint. Fortunately, clean energy is becoming cheaper and more available, thanks in part to investments by the same wealthy investors whom Volsky and Hanauer vilify. If policymakers want to use tax policy to expedite the transition, they should be taxing carbon emissions—not wealth.

In other markets, the dynamic is similar. Wealthy investors did not cause our skyrocketing housing prices—America’s refusal to build adequate housing did. Some investors have purchased existing homes to capitalize on rising home values, but other groups are focused on constructing new “built-for-rent” housing that earns profit while alleviating the country’s housing shortage at the same time. To make housing more affordable, policymakers should be cutting regulatory obstacles to its construction—not the capital needed to fund it.

Going beyond economics and politics, Volsky and Hanauer even argue that the rising wealth of billionaires is responsible for higher rates of homicide, infant mortality, and “deaths of despair” (deaths related to addiction or suicide). But several pieces of evidence in the United States contradict this thesis. Since 1980, our murder rate has fallen by half, despite increasing levels of inequality. Within the 50 states, there is no connection between a state’s infant mortality rate and its Gini coefficient (a commonly used measure of inequality). And West Virginia, the state with the highest rate of “deaths of despair,” is one of just three U.S. states without a single billionaire.

Climate change, unaffordable housing, homicide, infant mortality, addiction, and suicide are all real problems that deserve real solutions. But in all these instances, the Volsky-Hanauer analysis boils down to one faulty conclusion: America has a problem, and America has billionaires, therefore getting rid of billionaires will fix the problem.

Their solution is as misguided as their diagnosis of the problem. Hanauer and Volsky propose a “Five and Dime” wealth tax, which would force wealthy individuals to forfeit between 5 percent and 10 percent of their assets above $50 million each year. It has many flaws.

First, wealth taxes are extremely difficult to administer. Conventional taxes on capital, such as income taxes on capital gains, are comparatively simple to enforce because they tax a transaction. If a wealthy individual buys a painting for $2 million, and later sells it for $5 million, they can easily be taxed on their $3 million of profit. But if that same asset was subject to a wealth tax, the owner would be asked to subjectively estimate the painting’s value every single year in order to determine their tax burden. Even financial assets with measurable market values, such as stocks, can have those values fluctuate wildly in a matter of hours—making a fair annual valuation difficult to pinpoint. Wealthy individuals would have a huge incentive to underestimate and underreport the worth of hard-to-value assets, and the Internal Revenue Service (IRS) would struggle to prevent them from doing so (even with more funding for enforcement).

History shows that wealth taxes don’t raise significant revenue in part because these fundamental flaws lead to extreme rates of tax avoidance and evasion. In the Netherlands, for example, research shows that a 1 percentage point increase in the country’s wealth tax caused reported wealth to decline by 14 percent. In Denmark, the effect was even more extreme: A 1 percentage point change in the nation’s wealth tax rate led to a 31 percent change in reported wealth for ultra-wealthy Danes. And in America, the situation would be no different. According to a report cited by Hanauer and Volsky themselves, their proposed “Five and Dime” tax could miss out on more than half of its potential revenue in large part due to tax avoidance and evasion.

Beyond failing to raise sufficient revenue, a wealth tax would also harm our economy because it would incentivize wealthy individuals to spend down their investments to avoid taxation, reducing the amount of private capital available for investment. This fall in investment would ripple throughout the economy. Independent analysis shows that a wealth tax would reduce economic output and average wages (which in turn would reduce the government’s income tax receipts).

Over time, the revenue collected by a wealth tax would shrink even further, because if the tax achieved its stated goal of reducing billionaire wealth, the source of revenue it drew on would steadily diminish. It’s no wonder Denmark and the Netherlands have since repealed their wealth taxes, and they’re not alone. In 1990, 12 developed nations had wealth taxes, but today, that number has fallen to just four. And notably, even the highest of these tax rates never exceeded 5 percent—a far cry from the 10 percent Hanauer and Volsky propose. Thus, both the amount of revenue this tax would lose and the economic damage it would impose could be far larger than historical experience and conventional models would suggest.

It’s true that wealthy Americans can afford to pay more in taxes, but a “Five and Dime” wealth tax is not the way to get there. So what would a thoughtful alternative look like? We could increase income taxes and close loopholes that allow savvy taxpayers to avoid paying them, particularly on income from capital gains. We could replace our broken estate tax system, which allows wealthy individuals to pass on up to $14 million in assets tax-free, and institute a progressive inheritance tax that ensures the income someone receives from a large inheritance isn’t taxed at a lower rate than income they earn through their own hard work. And we could reform unfair provisions that allow wealthy Americans to receive tax advantages meant for small businesses, such as the pass-through business deduction. All these policies would reduce inequality in America, without imposing a radical and unprecedented tax regime that threatens to upend the entire economic system that gave us one of the world’s highest median household incomes.

But even though it is the right thing to do, we also must accept that taxing the ultra-rich won’t solve all our woes. Even if the “Five and Dime” tax raised as much revenue as Volsky and Hanauer believe it would over the first ten years and its revenue base didn’t shrink over time, that still wouldn’t be enough to pay for the promises our government has already made—let alone the “affordable child care, expanded housing, infrastructure investment, and climate initiatives” they claim it could fund. Realistic taxes with realistic revenue projections will fall even further short.

Instead of a counterproductive crusade against capitalism, people who are concerned about democracy and its relationship to our tax system should set their sights on a different goal: making the case to the American people that an active government is worth paying for. If voters only support broad-based social programs and public investments when someone else picks up the tab, those programs have neither democratic legitimacy nor the tax base needed to sustain them. The fixation on taxing billionaires as the solution to every problem only makes those very real problems harder to solve.

Amy Hanauer & Igor Volsky Respond:

We appreciate Ben Ritz’s thoughtful engagement with our argument for limiting extreme wealth concentration. While we disagree with much of Ritz’s critique, the debate confirms what’s at stake: whether a tiny elite should wield unchecked economic power over everyone else’s lives.

Our argument is straightforward: Beyond a certain threshold, vast private fortunes become so large that they distort democratic institutions, manipulate essential markets, and undermine broadly shared prosperity.

The Problem Goes Deeper Than Campaign Finance

Ritz suggests that campaign finance and government ethics reform can address billionaire influence. But the structural power derived from controlling trillions in assets extends far beyond campaign donations. The ultra-wealthy own media outlets, fund think tanks that shape policy debates, hire armies of lobbyists, and control companies that receive billions in government contracts.

And with our democracy and our economy hanging in the balance, it makes no sense to consider only one solution, a solution that those in power seem determined to avoid. Billionaires have spent some of their riches to underwrite legal, lobbying, and campaign strategies that prevent campaign finance reform, crafting a Supreme Court that is marred by the influence of wealth just as other parts of our government are. Campaign finance reform is necessary, but it may never happen and is, in itself, insufficient.

Ritz dismisses our concerns about private equity by suggesting that wealthy investors simply respond to market forces. But billionaire-led private equity firms don’t passively respond. They actively reshape markets. To return to an example we raised earlier, private equity firms currently own at least 1.6 million U.S. housing units and use aggressive revenue-maximizing tactics. By 2030, they are projected to own 40 percent of single-family rentals. This isn’t solving our housing crisis; it’s replacing the American model of homeownership as wealth-building with permanent rent extraction. Private equity’s influence over health care, energy, and other key industries is similarly destructive.

Inequality’s Documented Social Harms

Ritz cherry-picks data to argue that inequality doesn’t cause social problems. But decades’ worth of research tells a different story: Inequality contributes dramatically to worsening health outcomes across the United States. Certainly there are other changes that can make a dent in these problems, but as long as inequality continues to skyrocket, those other changes will be insufficient.

Research by the evolutionary psychologist Martin Daly has found that income inequality predicts murder rates better than any other variable. A U.S. cohort study of more than 16 million infants found that rises in state-level inequality predicted increases in infant and neonatal mortality, even controlling for other factors. Princeton economists Anne Case and Angus Deaton documented how “deaths of despair”—drug overdoses, suicide, and alcohol-related liver disease—rose dramatically among Americans without college degrees in the beginning of the twenty-first century, driven by economic inequality, declining social institutions, and our broken health-care system. Inequality—particularly when it includes the levels of poverty that the United States tolerates—makes communities unhappy and unhealthy.

Learning from Europe, Not Repeating Its Mistakes

Ritz notes that European wealth taxes failed. He’s right that poorly designed taxes failed. But the economist Gabriel Zucman and others have designed modern proposals explicitly to avoid repeating these failures.

European wealth taxes had fatal flaws: low thresholds that hit the assets of the only moderately wealthy, extensive exemptions that created huge loopholes, easy capital flight within the European Union, and inadequate enforcement. Denmark’s wealth tax kicked in for families at only the 98th percentile of household wealth. Countries exempted property like artwork from their calculations, creating incentives to park wealth in hard-to-value assets.

A well-designed U.S. wealth tax would be fundamentally different. First, U.S. citizens can’t escape by moving like Europeans can—they’re taxed on worldwide assets regardless of residence, with exit taxes for those who renounce citizenship. Second, high thresholds ($50 million and $250 million) mean the tax would target only the ultra-wealthy, making it harder to muster public support for exemptions. Third, no exemptions would mean no incentives for distorting investment decisions. Fourth, robust IRS funding would enable proper enforcement.

The lesson from Europe isn’t that wealth taxes can’t work—it’s that design and enforcement matter enormously.

Complementary Approaches, Not Either/Or

Ritz proposes reforming estate taxes and pass-through deductions, increasing capital gains taxes, and closing tax loopholes. We support these reforms, and the Institute on Taxation and Economic Policy, which one of us leads, has detailed proposals for many of them. But they’re complementary to wealth taxation, not alternatives to it.

Inheritance taxes address intergenerational transfers. Capital gains reform addresses income from wealth. Closing loopholes addresses current system gaming. But only wealth taxation directly de-concentrates extreme fortunes. Billionaires avoid income taxes indefinitely through the “buy, borrow, die” strategy. Wealth grows faster than income at the top. Other taxes capture transactions; wealth taxes address the accumulated capital.

Revenue for Democratic Decisions

Ritz argues that even optimistic revenue projections for a wealth tax wouldn’t solve all fiscal challenges. True, and we never claimed otherwise. But $6.8 trillion over ten years (or even half that, accounting for avoidance) represents substantial resources currently concentrated in the hands of private individuals who make choices that primarily enrich the ultra-wealthy. At a time when Republican policy is delivering ever larger tax cuts to the wealthy, we need to consider all of our policy options. The recently passed Trump tax bill will deliver a trillion dollars in tax cuts to the top 1 percent over the next decade. In that context, we are hardly in a position to take wealth taxes off the table.

How to spend this revenue should be a democratic decision: paying down debt, providing targeted relief to working families, investing in child care and infrastructure, funding climate initiatives. The point is to move these resources from private control—where they concentrate power—to democratic allocation through the political process.

Preserving Democracy, Not Attacking Capitalism

Ritz calls this a “crusade against capitalism.” We see it as preserving both capitalism and democracy. Market economies work best with broad distribution of economic power, genuine competition, and political institutions not captured by economic elites. Extreme concentration threatens all of these.

History supports our view. The Gilded Age’s concentration produced the Progressive Era’s reforms—antitrust law and progressive taxation. Post-World War II broad-based prosperity coincided with higher top tax rates. Recent decades of rising inequality have brought slower growth, reduced mobility, and political dysfunction.

We’re not anti-wealth or anti-success. We’re pro-democracy and pro-functioning markets. Americans’ upward mobility is blocked—not enabled—by an infinitesimal share of people controlling such an enormous share of our nation’s wealth and power. Billionaire preferences distort our markets, drown out other voices in our democracy, and warp our economy, to the detriment of this nation and its people.

Democratic societies should limit all concentrations of power, whether political or economic. That’s not radical; it’s essential to maintaining the balance necessary for both prosperity and self-governance.

Ben Ritz Responds:

I don’t disagree with Igor Volsky and Amy Hanauer’s conclusion that market economies “work best with broad distribution of economic power, genuine competition, and political institutions not captured by economic elites.” But for people who accuse their critics of “cherry-picking data,” they themselves have picked some very rotten cherries to make the case that billionaires are responsible for nearly every social ill facing the United States, and that the only reasonable solution is a massive “Five and Dime” wealth tax. It’s a deeply flawed argument for a deeply flawed policy that doesn’t stand up to even light scrutiny.

Take, for example, their claim that billionaire-backed private equity will own 40 percent of single-family rentals by 2030 and “replace the American model of homeownership.” I reached out to Paul Fiorilla of the real estate research firm Yardi Matrix, whose 2022 paper included an oft-cited reference to that projection by MetLife, to help dissect it. His response: “I don’t think anything I’ve ever written in my 40-plus-year career has ever been so taken out of context.”

The problems with their claim are numerous. One is that the projection they cite included only single-family rentals, which comprise just one-fifth of all single-family homes—that’s clearly no basis to conclude any effect on homeownership. Another is that the projection referred to the difficult-to-define category of “institutional investors,” many of which are capitalized by pension funds and publicly traded real estate investment trusts—not private equity. Finally, the projection was made during a time of low interest rates, and institutions were buying homes at a rate far faster than they are today. Institutions have almost completely stopped purchasing single-family homes since the 2022 rate increases.

Here’s the reality: Institutional investors currently own less than 2 percent of single-family homes. To the extent that they are still expanding their real estate holdings, it is primarily by building new housing rather than displacing existing owners. In doing so, they are actually driving down the cost of housing for middle-class families rather than “extracting” wealth from them. In Dallas, one of the cities in which institutional investors have expanded their footprint the most since the pandemic, single-family rents fell by more than 6 percent last year due to the recent construction of more than 10,000 new properties.

This is just one of several instances in which Volsky and Hanauer misrepresent their sources. Here’s another: They cite economist Angus Deaton’s analysis of “deaths of despair” among Americans without college degrees but ignore what he actually says is the cause.

“I would want to distinguish between inequality and injustice. And there are some times when I’m very sympathetic to the argument that people who get very rich in the public interest should be allowed to get very rich. I don’t see anything wrong with that,” says Deaton in the very interview cited by Volsky and Hanauer. “It’s the rent-seeking that’s the problem in some sense, not just the people getting rich. And if people bring benefits to the rest of us, then I don’t have much problem with that.”

In other words, Deaton isn’t condemning the existence of billionaires—he’s criticizing a system that allows people to become wealthy without creating value, such as by buying out their competitors to obtain monopoly power or needlessly complicating our health-care system to profit as middlemen. These problems must be addressed, but a wealth tax would do nothing to solve them. In fact, Deaton himself has opposed the creation of a wealth tax, which he (like me) argues will be difficult to administer and enforce.

Volsky and Hanauer handwave these concerns away by claiming that “[R]obust IRS funding would enable proper enforcement.” I have long advocated for increased funding for enforcement of tax laws, which Democrats enacted in the 2022 Inflation Reduction Act (IRA). But this funding was needed because the IRS already struggles to enforce the comparatively simple taxes we already have on the books. And even with adequate funding, it takes time to hire and train auditors and agents. The Biden Administration was ultimately unable to spend more than a fraction of the enforcement resources allocated by the IRA before Republicans started clawing them back. If the IRS can’t even enforce our current tax code, how can we expect it to properly administer one of the most complex taxes ever conceived? These flaws, combined with those I mentioned in my first rebuttal, render Volsky and Hanauer’s lofty revenue estimates highly suspect.

Volsky and Hanauer’s political arguments are just as flawed as their economic arguments. They say a wealth tax is needed to curtail billionaire influence in politics because “Campaign finance reform is necessary, but it may never happen and is, in itself, insufficient.” I don’t disagree with them one bit here: We need new mechanisms to enforce ethics in this post-norms era. But many countries in worse shape than the United States is in today have cleaned up corruption and established robust democratic institutions. No country has ever enacted a wealth tax at even half the 10 percent top tax rate that Volsky and Hanauer call for. The argument that we need a “Five and Dime” wealth tax because these other reforms are so politically difficult to achieve doesn’t make sense on its face.

We also must recognize that a wealth tax, even at an absurdly high 10 percent rate, wouldn’t actually stop billionaires from wielding influence in the many ways Volsky and Hanauer claim they do. When Jeff Bezos purchased The Washington Post in 2013, the price amounted to just 1 percent of his net worth. No wealth tax would have prevented that acquisition, nor will one prevent donations to think tanks, payments to corporate lobbyists, or any of the other ways Volsky and Hanauer complain that billionaires exert undue influence over our political system.

It is worth reiterating that I believe opportunity in the United States is far too unequal and that tax policy can help level the playing field. But the “Five and Dime” wealth tax championed by Volsky and Hanauer is a false solution to a misdiagnosed problem. Even worse, it has the potential to actually cause economic harm. Despite Volsky and Hanauer’s claim that “[N]o exemptions would mean no incentives for distorting investment decisions,” the policy would be hugely distortionary by exempting consumption while taxing investment. Someone whose wealth is more than $250 million and who uses that wealth to build a job-creating factory will pay a 10 percent tax on the value of that factory every year it exists. This cost could end up being even greater than a 100 percent tax levied on the capital gains generated by the investment. But if the investor instead spends that money on a joyride to space or a lavish vacation here on Earth, it won’t be taxed. Those incentives are obviously bad for growth.

Instead of pursuing policies designed solely to punish billionaires regardless of the consequences, policymakers should be trying to raise more revenue through better-designed tax policies that promote economic prosperity to the benefit of all Americans. The time and energy Volsky and Hanauer are wasting promoting the “Five and Dime” wealth tax would be far better spent advocating for the more practical tax policies all three of us have endorsed in the course of this debate.