Nov/Dec Wealth Tax Topic Analysis
Resolved: The United States ought to adopt a wealth tax.
Analysis by Joshua Bonilla
1 Intro
“Another version of Sep-Oct” was the largest comment that I heard many mention when this topic released. Yet, this topic goes about wealth redistribution based off the wealth gap and a way debaters can argue a solution towards the problem. While it may still rely on economic concepts, this topic presents itself towards its focus on tax laws and inequality that arises from these laws which is distinct from the September-October topic.
1.1 Topicality
Wealth Tax has a broad amount of interpretations between what it can be. The threshold is just being a tax on the wealth of the rich. Often this would not just involve not just money but also the assets the rich have. Here are a few proposals that could help for specific interpretations that were all considered a wealth tax by many:
- United States Senator Elizabeth Warren with U.S. Representatives Pramila Jaypal and Brendan Boyle advocate for a tax on what they call “ultra-millionaires” (Warren 2024).
- Before President Biden’s drop in the election, he advocated for a wealth tax for Americans with over 100 million dollars taking about a 25 percent tax for each of them (Kim 2023).
- Norway holds a 1 percent wealth tax on stocks exceeding NOK 1.7 million (160,000 U.S. dollars) and net wealth of about 1.1 percent for people with 20 million NOK (1.94 million U.S. dollars) (Enache 2024).
Additionally, one-off wealth taxes have also been implemented worldwide but were mainly done in huge financial crises when a country required money (O’Donovan 21). [I’m extremely skeptical if a one-off wealth tax is enough to prove that the United States should adopt a wealth tax, but this could be a creative interpretation]
Isagora Briefs has also posted its own T/Definition file which can be helpful!
1.2 Background
1.2.1 Tax Law
You’ve probably heard the phrase “Wealthier families often have to pay lower taxes compared to families who have less wealth”. This doesn’t make sense in principle, yet wealthy households have an advantage that many households don’t. These wealthy households can declare taxes as “unrealized” and delay or even up to avoid the income taxes that happen.
Taxpayers must do a lot of calculating about sources of income that they may have and when it comes to income, it’s seen in this “unrealized” state. A good example this is value over time. If I bought a house that was worth $300,000 and it jumps to $600,000, then taxes do not grow. This is how value grows between assets and taxes get smaller (because it’s the exact same!).
The topic arises as a solution towards this by not just taxing the income that has been “realized” but also the “wealth” that a household has.
1.2.2 History
While the U.S hasn’t implemented a wealth tax yet, other countries have implemented a wealth tax (and even some have repealed them). Specifically, Austria, Denmark, Finland, France, Germany, Iceland, Italy, Netherlands, Norway, Spain, Sweden and Switzerland. As mentioned in the Wealth Tax topicality section, there has been multiple instances in which a wealth tax has been proposed in the U.S specifically.
1.2.3 Helpful Videos
Videos are some of the most underrated ways to learn about a new topic. I’m going to link 2 below with a general description about what they are about.
Financial Times looks at a general understanding for what a wealth tax is:
This specifically looks at what happened in Columbia when a wealth tax was implemented
2 Affirming
2.1 – Inequality
Likely the most common argument that’ll be present in these debates. By addressing extreme wealth concentration, a wealth tax can contribute to a more equitable economy. This helps create a more level playing field, allowing individuals from diverse backgrounds to accumulate wealth and pass it on to future generations
2.2 – Generational Wealth
A wealth tax can help increase the generational wealth that the worst-off currently have. If a wealth tax encourages more individuals to invest in businesses or property rather than simply accumulating wealth, this can lead to asset growth. As families accumulate assets, they can pass these on to future generations which begin the cycle of generational wealth.
2.3 – Innovation
Many wealthy individuals may seek to avoid the wealth tax by investing in innovative ventures, startups, or research & development. This can lead to an increase in funding for new technologies and ideas, driving innovation in various sectors. By incentivizing wealthy individuals to spend or invest their money rather than hoard it, the tax can promote a more dynamic economic environment that fosters innovation.
2.4 – Rawls
John Rawls is a philosopher who attempts to find the best way to achieve justice and is relevant in this topic because of the prominence of the inequality argument. A debater could argue that a wealth tax is needed to achieve the justice that a Rawlsian framework would want. Most inequality arguments become stronger with a Rawlsian lens which can help defend a lot of different frameworks that are extremely consequential.
2.5 – Climate
Wealth taxes can be helpful towards solving the climate crisis that arises. Most investments fail to happen due to a lack of underfunding, but a wealth tax may be able to fund many proposals that can help reduce climate change. While it may only be the United States implementing this, there is still a help that comes with being able to tax the wealthy and it may even incentivize other countries to do the same.
3. Negating
3.1 – Offshoring/Flighting
Many topics often have an offshoring argument to try and argue that the affirmative will be circumvented. This seems to be particularly true in this topic with France’s wealth tax. When France implemented its wealth tax, it saw a small growth of revenue but a net loss when considering the flight, loss of jobs or even brain drain that happened.
This argument is likely to be the most common one but I don’t believe that it’s a bad example of how a wealth tax can be a dangerous incentive to implement.
3.2 – Libertarianism
The principal idea of the government saying and controlling what you can do with your money is something that libertarianism would state is wrong. Wealth taxes would infringe on the possibility of the free market because it would be the government interfering and taking away your money and sacrificing parts of your autonomy in the process.
This can be an interesting article to look at if you are interested in this!
3.3 Constitutionality
There is some skepticism about if a wealth tax can even be considered constitutional. 2 parts have specifically been highlighted of the constitution:
First, The U.S. Constitution in Article 1, Section 8, Clause 1 states. “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States”.
A wealth tax does not seem to be uniform throughout the United States since it specifically targets the wealthy which can be a compelling argument if established correctly.
Secondly, the question of direct taxes being implemented. Article I, Section 9, goes over how direct taxes should be placed based on states by population. 2 options come into play, a amendment or an overturning of the law. Others have argued that none is needed, but I think it can help the negative to point this out.
Many options go side by side in this situation and more recently, Texas made it so state lawmakers can’t impose a wealth tax
3.4 Implementation
Beyond the debate about if it is constitutional or requires any other level of policy, enforcing a wealth tax has historically been difficult. The calculations determining what a assist is worth and how much wealth it provides would be a nightmare for the IRS. This may even require more funding towards the IRS which may increase taxes that people hold today.
3.5 Disincentives
If it’s already dangerous for most people to hold assets based on market fluctuation, the wealth tax disincentivizes many possible investments.
I’ll put a hypothetical scenario to make this a clear explanation
Let’s say you invested in a stock of about 30,000 and it rises by 50 percent. What the government would do is take a certain percentage of that now 60k. If that stock suddenly falls, the value will likely return to the 30,000 you invested to begin with. There are simply no profits, and you’ve lost a chunk of your money because of these conditions.
This means that short-term investments would be preferred, and it kills the possibility of people having spare money to be able to pay these taxes later. If all my money is held in assets, I’m forced to sell part of those assets to pay off the taxes which disincentives investments.
Beyond economics, wealth taxes can reduce charitable amounts, given that the wealth do. Here is an article that investigates that:
3.6 Criticisms
There are few more critical options that can be taken when it comes to economic topics. Of course, the Cap K is the first one that comes to mind arguing that a wealth tax continues fostering capitalism even if looks like a move away from it. Some arguments could arise of Settler Colonialism arguing that a wealth tax is a move towards innocence and has been historically used as a process in Canada. There is a possibility to explain that the rhetoric of the 1AC is bad and can establish bad discourse and practice that can dehumanize people.
3.8 Alternative Options
As mentioned previously, this topic considers wealth redistribution but that doesn’t change most if not all alternative proposals that the negative can present. The UBI counterplan, the FJG counterplan, heck even the possibility of a Living Wage counterplan is possible. Yet, beyond these possibilities is an estate tax counterplan that can target transitioning points of wealth rather than accumulation. Luxury taxes may also be great at targeting wealth without having to specifically target assets that people own.
4 Closing Thoughts
My first initial thoughts on the topic were being kind of sad about it until I drove into research. You shouldn’t see this as another version of September-October but rather a fresh new topic that investigates different ways to solve wealth inequality. I think the topic will lead to some interesting debates and I see equal ground for both traditional debates and more national circuit debates. I wish you all luck in your debates and I hoped this topic analysis helps you get a jumpstart!
- Joshua Bonilla
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