Billionaire hedge fund manager Bill Ackman is right to classify a proposed wealth tax in woke California as essentially theft of private property.
The Founding Fathers were not fans of income taxes, but they were particularly opposed to our unjust graduated or “progressive” income tax system where success is punished and discouraged with inflated taxes. The wealth tax California Democrats want would be even worse. You’d think even Democrats would eventually realize they are driving all business and wealth out of their state, but they seem to have zero learning curve.
Ackman is not a resident of California, but his critique is valid nonetheless. California is facing an $18 billion budget deficit, and instead of cutting its many freebies for illegal aliens and boondoggle projects like the high-speed rail that never materializes, Democrats want to spend drunkenly and just steal more of their taxpayers’ money. No wonder so many people and businesses move out of California.
In an X post last week, Ackman wrote, “On the topic of billionaires and wealth taxes in California, I am opposed to wealth taxes because they effectively represent an expropriation of private property and have many unintended and negative consequences that have occurred in every country that has launched such a tax.”
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He did express some sympathy with the view that it is unjust if “someone can build a valuable business, create a billion or more in wealth and pay no personal income taxes by living off loans secured by stock in the company, (and even if the loans are unsecured). Apparently, this approach is used by many super wealthy people. A small change in the tax code would address this unfairness.”
Unfortunately, the onerous weight of our progressive tax system, which added to the state taxes in a blue state like California are particularly bad, encourages unscrupulous businessman to look for loopholes. The best fix would be to ditch a progressive tax system altogether and cut income taxes. But that would require a reduction in California’s welfare state. The true underlying problem is the socialistic ideology behind our whole tax system, and the absolutely irresponsible spending of wasteful politicians.
Ackman had his own suggestion: “Personal loans taken in excess of one’s basis in the stock of a company should be taxable as if you sold the same dollar amount of stock as the loan amount. One shouldn’t be able to live and spend like a billionaire and pay no tax.”
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After suggesting the above, Ackman described himself as open to counter arguments but maintained, “The favorable current tax treatment of this approach also encourages the use of leverage which is not good for society. And with respect to California’s budget problem, the issue is not a lack of tax revenues. The problem is how the money is being spent.” He is absolutely right on that score.
California doesn’t need higher taxes on wealthy people. It needs a more financially responsible government.
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