His comment on Saez and Zucman is one of the best pieces of policy economics I have read in the last few years. Many of the main arguments have been debated on Twitter, or expressed by Larry Summers, so here I will stick with a few side points that have not received full attention.
First, if you hate monopoly rents, excess IP income, and the like, you should not be in love with a wealth tax, at least not in the steady state! A wealth tax hits the base and the safe rate of return as well. Ideally the anti-monopoly crowd should most of all favor higher taxes on net income. Not taxes on wealth.
Second, a wealth tax will encourage the shifting of much more production into non-profit institutions, or perhaps even into nationalizations of industry. Lots of hospitals would switch back to the not-for-profit form, not obviously a beneficial development in my view.
As a side note, many more non-profits would hire famous musical acts to play at their donor galas. The quality of champagne and cheese at those events will rise too. There would be much more pressure on non-profits to create private (non-taxed) benefits for their donors. I predict government regulation of non-profits would end up rising considerably as well, and not for the better.
Privatizing government assets such as land or spectrum would become more difficult — people would buy only at much lower prices. So the wealth tax is a recipe for greater statism in more ways than one.
Third, under a wealth tax Jeff Bezos would have lost de facto control over Amazon some time ago.
Those are my words rather than Kopfczuk’s, do read his entire paper.
I would add one final point. I think we are at the margin where advocacy of a wealth tax is more of a performative exercise — “we hadn’t poked rich people in the eye with this rhetorical needle yet, therefore I won’t really speak against it” — than any kind of substantive analytic debate.