Very large fortunes depend on public goods the fortune did not pay for

The argument

The case for higher taxes at the top begins with how large fortunes are actually made. Proponents argue that no business of any scale operates without courts that enforce its contracts, police that protect its premises, roads and ports that carry its goods, a currency that holds its value, patent and property law that secures its claims, and a population educated and healthy enough to work for it and buy from it. These are public goods, paid for collectively, and proponents argue that the larger the enterprise the more heavily it draws on them. The inference proponents draw is about proportion rather than punishment. If the conditions that make great wealth possible are publicly provided, then a contribution scaled to the benefit received is not a penalty but a bill, and proponents argue that the very largest fortunes are the clearest case of a benefit that outruns what was paid for it. They add that much of such a fortune typically consists of appreciation in the value of assets rather than earned income, and that systems built to tax wages therefore reach it only lightly, which is a feature of the design and not a judgement about desert. Proponents argue that this reframes the usual objection. Asking whether a particular person deserves their wealth is, on this account, the wrong question; the question is who should pay for the arrangements everyone relies on, and the answer a tax system gives is implicitly that those who benefit most should pay the most. Proponents conclude that a system collecting proportionally less from the largest fortunes than from ordinary salaries has the principle exactly inverted, and that correcting it means billionaires paying more.

Premises

Counter-arguments

Opponents reply that the benefit received has already been paid for many times over, through corporate tax, employment taxes, the taxes paid by employees whose jobs exist because of the enterprise, and the goods the public buys voluntarily. They argue that the premises identify no limit: any contribution could be called insufficient on this reasoning. They add that taxing asset appreciation is not the simple correction it appears, since the value is unrealised and often illiquid, so collecting it requires forced sales that destroy the productive holdings the tax is meant to draw from.

Rejecting the premises

[Rejecting P1] The enterprise already funds those conditions through corporate taxation, employment taxes and the taxes paid by the workforce its activity supports. [Rejecting P2] Drawing more heavily on infrastructure is already reflected in charges, duties and the scale of tax paid, so the premise identifies a cost that is not in fact unmet. [Rejecting P3] Asset appreciation is unrealised and frequently illiquid, so a tax reaching it requires forced disposal of the productive holdings it is levied on. [Rejecting C] At most the premises show that the tax base is poorly matched to where wealth accumulates, which is an argument about the design of taxation rather than for a heavier burden on individuals.