No, we can’t make the rich pay for it!

Can we solve all issues by taxing the wealthy, having the government build clean power plants, and producing cheap batteries to undercut fossil fuels?

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.

The key takeaway is that tax rates have an upper limit, and government monopolies often underperform compared to experienced managers in a competitive free market. Private investment, driven by a healthy economy, is crucial for advancing green technologies and funding essential sectors like defense and education.

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, as past experiments have shown.

The pharaonic wealth attributed to the rich is primarily tied to their assets, not liquid cash. Taxing wealth effectively would require cash buyers, but if all wealthy individuals are selling, 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. Taxing these non-cash assets presents significant challenges. 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.[1]

As the threat of global warming looms, extreme measures like high tax rates or asset confiscation might appear to be last-resort solutions, akin to responses in wartime emergencies. However, these approaches carry significant risks.

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 result in negative consequences. This approach can undermine private initiative, infringe on individual rights, destabilize the economy, and jeopardize critical sectors such as employment, national defense, and funding for the green transition.

Adopting socialist policies could potentially lead to dictatorship, eliminating checks and balances, manipulating climate data to obscure failures, minimizing the impacts of poverty, favoring allies with subsidies, and penalizing opponents through complex taxation systems.

Relying on higher tax rates and an expansive government could divert attention from the real solution: the development of essential green technologies. History shows that individual responsibility, when properly organized, has been more effective in driving progress. It is crucial to explore ways to integrate a green economy without resorting to dangerous extremes.