Taxing high incomes: a tried and ineffective approach
History has shown that the government cannot simply fix everything by heavily taxing high incomes without restricting individual liberties.
Watchout: Raising tax rates doesn’t necessarily lead to higher tax revenues. Historically, high taxes led to economic stagnation, as seen in the 1970s. Such policies often falter due to inefficient government management, where tax revenues are redistributed through regulations and monopolies rather than invested wisely.
We cannot achieve a green transition by sacrificing economic vitality or stifling the innovation of individuals capable of developing green technology. Moreover, reverting to high tax rates could harm low-income households by reducing job opportunities and could ultimately generate less(!) tax revenue for the government, as past experience has shown.
The wealth of the rich is neither cash nor income
The pharaonic wealth attributed to the rich is primarily tied to their assets, not liquid cash. Taxing wealth effectively would require cash buyers, but who would be able to buy?
The rich hold most of their wealth in assets such as stocks, real estate, and other investments, rather than in cash. If a wealth tax were implemented, it would necessitate finding cash buyers for these assets. But if all wealthy individuals were forced to sell, who would purchase these assets, and at what price? The expected tax revenue might be minimal, if not entirely absent.
Confiscation risks leading to dictatorship
As the threat of global warming intensifies, asset confiscation may appear to be a last-resort solution. However, such action would risk leading toward dictatorship.
While confiscating assets instead of taxing them in cash might seem like a viable alternative, history has shown that such measures—similar to those taken during communist-era nationalizations—often produce negative consequences. This approach can undermine private initiative, infringe on individual rights, eliminate checks and balances, strengthen authoritarianism, destabilize the economy, distort climate data, and jeopardize critical sectors such as employment, national defense, and funding for the green transition.
Relying excessively on an expansive government can also divert attention from the real solution: the development of essential green technologies. History suggests that individual responsibility, when properly organized, has been more effective in driving progress. It is therefore crucial to explore ways to integrate a green economy without resorting to dangerous extremes.