Tyler, Greg and Brad all forget the Coase theorem – all externalities are dual. The solution to envy is not to tax the rich but to tax the envious. To be envied is unpleasant. People want to be admired but not envied. To be envied is one step from being hated. (Consider how much crime is motivated by envy.) It’s envy which imposes an externality on the rich. Make the envious pay for their ugly preferences.
Surprising analysis? Not really – should gays be taxed because they make some people uncomfortable? Hell no. Tax the bigots for making gays feel unwelcome.