I'm pretty sure Shakespeare did not have taxes in mind when he penned the phrase, "A rose by any other name would smell as sweet." I also feel confident that most of us don't associate notions like "rose" and "sweet" with taxes. Nonetheless, Shakespeare's question -- "What's in a name?" -- does have relevance for the thorny matter of tax names.
Look no further than the notion of "wealth tax." Upon merely reading that phrase, many of you will now be feeling agitated. Others will be feeling righteous indignation. Against it or for it, the very idea of a "wealth tax" riles people.
Now, let's try another one: "property tax." Just not the same excitement, is it? Surely there are all sorts of opinions about "property tax," against it or for it and with all sorts of variations on how it should or shouldn't be done, but "property tax" simply does not carry the emotional heft of "wealth tax." There is so much stigma about “wealth tax,” yet “property tax” is commonplace.
This difference of emotional response matters because... "wealth taxes" and "property taxes" are the same thing! Property is an asset that can be assigned a value, upon which taxes are assessed; “wealth” and “property” are effectively synonymous. We have been conditioned to think of “property taxes” as applying to real estate property (and sometimes other tangible property such as vehicles), but that is only one category of "property," not its full extent. "Property" includes anything that one owns, which surely includes financial assets.
Who among us would not consider it a trespass for a stranger to encroach upon our bank accounts or investment accounts? There may not be physical “no trespassing” signs for financial property like there are for real estate property, but the principle is the same.
Just like real estate property, financial property is an asset that can be assigned a value upon which taxes are assessed. In fact it is assigned value far more readily and regularly than real estate property -- your online accounts show you the real-time value of your financial holdings quickly and easily, whereas real estate and tangible property can only be assigned value with scheduled, time-consuming, costly, and prone-to-subjectivity assessments. In terms of both simplicity and clarity, what we call "wealth" has more to commend it for a reasonable tax than what we call "property" does. But for some reason we, in our current policies and much of our culture, treat “wealth” taxes like the plague even as we proceed with conceptually equivalent and harder-to-execute “property” taxes.
If the names are the problem, then let’s dump the terminology “wealth tax” and simply expand the application of “property tax” so “property” in the fuller, truer sense is assessed for its value to individuals and society. Or, in another approach toward the same end of greater consistency in both cultural thinking and value-adding policy-making, let’s start calling our property taxes “wealth taxes” so that the concept loses the stigma and “wealth” in the fuller, truer sense is assessed for its value to individuals and society.
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