J.D. Tuccille: Wealth-hating economists leverage credentials for billionaires tax

Article content

The exodus was predictable. People with means — even moderately so — tend to flee governments that covet their money. In 2024, summarizing a paper that examined state-level tax policies from 1900 to 2010, the University of California-Riverside noted, “the introduction of income tax in the post-World War II era led to out-migration by wealthy Americans” from states that imposed the tax.

Article content

Most likely, Zucman ignored legal pitfalls and history because they’re inconvenient to his mission.

Article content

“He has gone from a historical and quantitative analysis of inequalities to an activist approach. And he is now trapped by the public persona he has become. That makes scientific debate more difficult,” Antoine Levy, another University of California-Berkeley economist who has clashed with Zucman, told Le Monde in an otherwise sympathetic profile of the Prop. 40 booster.

Article content

Zucman’s flaws extend beyond ignoring historical evidence about people’s reactions to taxation.

Article content

On X, economic historian Phil Magness noted: “In 2019, California billionaire tax crusader Gabriel Zucman made an astonishing claim to the NY Times: billionaires pay a lower avg tax rate than poor people in the U.S. I noticed something fishy though: Zucman’s NYT chart did not match his own published data from a 2018 paper.”

Article content

Article content

Independent Institute research fellow Kristian Fors agrees, pointing out that the widely publicized work of Zucman and Saez forming the basis for the wealth tax claimed, “the overall tax rate for the top 400 richest households in the nation was 23 per cent.” But this contradicts the duo’s earlier research, which “estimated that the top one per cent paid an overall tax rate of approximately 36 per cent” and put the tax rate for the very highest earners at 41 per cent.

Article content

The lower estimated tax rate was the result of unusual accounting. Fors emphasized that conventional analysis accepts that corporate taxes affect shareholders, workers, and consumers as the tax gets passed on. That produces the earlier estimate of a 41 per cent tax rate for the wealthiest. To get the 23 per cent figure, Zucman and Saez used a non-standard analysis and didn’t submit it to peer-review.

Article content

Playing fast and loose with economic research methods is a risky move if you’re trying to promote a one-time tax in one American state. But it might look worthwhile for activists trying to change the world.

Article content

Interviewed by the University of California-Berkeley in January, Zucman advocated an annual worldwide wealth tax of two per cent on the assets of the rich — as a starting point. “I hope it would encourage countries to create more progressive wealth taxes,” he boasted. “I view the two per cent minimum wealth tax as an irreducible floor, but certainly not a ceiling.”

Article content

Article content

Zucman makes bold claims about the money wealth taxes can raise. But it’s not clear targets will remain wealthy enough to be taxed unless the threshold is reduced. These taxes go after unrealized wealth — shares in companies, for example — not just liquid cash. Those assets may have to be sold to pay tax bills.

Article content

In a 2019 assessment of a wealth tax proposed by Vermont’s socialist Sen. Bernie Sanders, Zucman and Saez happily concluded, “the Sanders wealth tax would reduce the wealth of the typical billionaire in half after 15 years relative to a situation with no wealth tax.” Wealth would continue to erode from there.

Article content

Gabriel Zucman and his colleagues certainly behave more like activists than economists as they leverage their academic credentials to promote their preferred tax policies. As they do so they don’t really advocate for taxing wealth so much as for ending its existence.

Article content

National Post

Article content