The Financial Times Warns Against Relying on the Rich for Taxes

It’s nice to see the London Financial Times questioning the left’s tactic of soaking high earners to fund their socialist agenda. “The problem with taxing the rich” is the headline it runs over a dispatch by its global tax correspondent, who elucidates what might be considered common sense. We remember when, back in the 1980s, the FT was denouncing Prime Minister Thatcher’s supply-side tax cuts. Is New York’s Zohran Mamdani paying attention?The FT’s concerns over tax-the-rich schemes, in any event, emerge amid proposals by Mr. Mamdani to raise the city’s levies on its wealthiest residents. The Democratic Party’s nominee seems to harbor even existential doubts as to the highest earners in our midst, musing, “I don’t think we should have billionaires.” The candidate shares with such fellow travelers as, say, Senator Elizabeth Warren, a tax vision that could well drive the wealth creators from the city.Mr. Mamdani’s talk of higher income taxes on high earners, or even a wealth tax, is often dismissed as unlikely since such measures would require approval by state lawmakers at Albany. Yet following Governor Kathy Hochul’s endorsement of Mr. Mamdani, the Times suggests such measures could prove more plausible than expected. Mr. Mamdani and Mrs. Hochul, per the Times, “appear to be aligned on tackling the city’s affordability crunch.”Plus, too, Mrs. Hochul’s “endorsement leaves several questions, including where she stands on Mr. Mamdani’s more controversial ideas, like a wealth tax,” the Times reports. Proposals to raise taxes in the name of “affordability,” the Times adds, are “a problem that is roiling politics as far away as France.” On this head, per the Times, Mr. Mamdani seems to be taking a page from an economist at Berkeley and the Paris School of Economics, Gabriel Zucman. The French economist’s proposal to tax high-earners in France — a so-called “Zucman tax” — has “ignited similar fury” at Paris, the Times reports, raising “fears of capital flight.” That concern would appear to be well-founded, as these columns have reported, in light of the tax dispute that has arisen between France and Italy. Under Prime Minister Giorgia Meloni, Italy is emerging as a tax haven for high earners, leading thousands to move there.Leftists like Mr. Zucman aver that taxing the rich “would raise badly needed revenue to plug the country’s struggling finances,” as the Times puts it. “The priority should be to do something with the super-rich,” Mr. Zucman suggests, adding that “not only are they the wealthiest people on the planet, it turns out they also happen to be the ones who pay the least tax.” Yet the FT’s report suggests the folly of attempting to punish the rich for their success.“Imposing higher capital taxes on a relatively small number of very wealthy individuals often prompts changes in their behavior,” the FT reports, “that limit or even reduce the amounts raised.” Arthur Laffer, call your office. The FT’s insight here is one that has guided the successful supply-side tax cuts under Presidents Harding and Coolidge in the 1920s, as well as the proposals made by JFK in the 1960s, and, most notably, Reagan in the 1980s.In a global economy, attempts to pin down the wealthiest with taxes in one country are increasingly futile, the FT warns. “Given the rich are extremely mobile and less and less attached to the country that made their wealth, they can shift and they do,” says the former head of tax at the Organization for Economic Co-operation and Development, Pascal Saint-Amans. What makes Mr. Mamdani, or Mrs. Hochul, think such levies would work for New York?

The Financial Times Warns Against Relying on the Rich for Taxes

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