While I love arguments against ideas I think are horrible, I think it is also important to only love the good arguments. Take the wealth tax (a.k.a. the property pillage, asset appropriation, stuff snatch, goodie grab, cash capture, etc.). Much was made recently about the fact that many countries had wealth taxes, but got rid of them. If given this evidence that other countries eliminated these taxes, and you assume that governments only change tax policy in policy-improving ways, then you know wealth taxes are a bad idea. Other countries tried them, but got rid of them, so wealth taxes are bad. Q.E.D. So what is wrong with that thinking?
I don’t personally think democratic systems only eliminate bad taxes that didn’t work (or adopt good tax systems). You can imagine taxes that impose costs on wealth groups that are out of political power that, rising back to power, those groups will fight to eliminate those taxes. So, absent knowing, on a country-by-country basis, the specific reasons why the taxes failed, the fact that they were eliminated is not de facto evidence that they were bad.
To be clear, I do think wealth taxes are a bad idea. The flaws are well-known. They are unenforceable, cause liquidity problems, have valuation problems, may cause capital flight, won’t raise nearly as much revenue as claimed, are claimed to be used to fund policies which will cost much more than claimed and will have perverse economic outcomes, may be unconstitutional, incentivize consumption over savings, etc. etc., etc., etc. But the fact that other countries got rid of them is not evidence in and of itself evidence that these policies are bad.
Update: Saez and Zucman say some similar things about failure in other places not necessarily meaning failure here in the U.S., here.
