The Wealth Tax Is a Scam and the VAT Is Sneaking Up on You

The Establishment Is Uniting Around Your Wallet

Here is something the mainstream financial press is not going to say plainly: the political establishment, left and right, is quietly converging on the idea that you need to pay more. I watch how narratives get constructed in the media, and the setup for higher taxes is already well underway.

Paul Krugman and Joseph Stiglitz, Nobel Prize winners, just co-signed a letter supporting California’s 5% wealth tax on billionaires. I went and read that letter. You know what I found? No real substance. No workable numbers. No explanation of how this tax actually functions in the real world. What I found was intellectual branding for a fundamentally broken idea.

The Wealth Tax Fails Basic Logic

Let me give you the version the economists refuse to give you.

Somebody starts a company, raises $50 million, and Wall Street decides it is worth $1 billion. How? Because that is what someone else might pay for it. It is a paper valuation, not cash. It does not sit in a bank account. You cannot write a check on it.

Look at sports franchises. Apollo is buying into the New York Yankees. Does anyone actually know what the Yankees make? Of course not. The financials are opaque. The valuation is assigned, accepted, and used as collateral. Owners borrow against it. It never seems to go down. The numbers underneath never get explained.

Wealth operates the same way. Consider:

• Elon Musk’s trillion-dollar net worth is tied up in Tesla and SpaceX stock
• There is not enough cash on earth to buy him out of those positions at current prices
• Taxing that as though it were cash is economically incoherent
• When markets crash, that is what happens when paper wealth meets real cash demand simultaneously, and it destroys value fast

You cannot tax something that does not exist as liquid money without forcing fire sales, collapsing valuations, and creating the very destruction you claim to be preventing.

The Sneakier Threat: The VAT Tax

Now here is the part that should concern every consumer reading this, because the wealth tax debate may actually be a distraction.

A respected figure on the center-right, Peter Tunis, chairman emeritus at Lynx Investment Management in DC, is openly calling for a Value Added Tax. And I have been warning about this for a while.

Why will politicians on both sides eventually love the VAT?

• You do not see it on your receipt as a separate line
• It is baked into the price of everything you buy
• People feel it but cannot easily organize against it
• Governments have discovered for centuries that invisible taxes are the easiest to keep

Human beings wear down. The outrage fades. The tax becomes permanent.

Both Sides Are Setting You Up

This is the part that should make you genuinely angry. This is not a left versus right story. The progressive economists provide the moral framing. The center-right provides the “responsible alternative” framing. And somewhere in the middle, your purchasing power gets gutted while politicians on both sides tell you they fought for you.

What you need to be watching:

• State-level wealth tax proposals as trial balloons for federal policy
• VAT discussions being framed as “deficit solutions” by both parties
• Any legislation targeting unrealized gains in investment accounts
• How your estate and retirement planning holds up under an aggressive new tax environment

The wealth tax is bad economics dressed up in academic clothing. The VAT is worse because it is designed to be invisible. Neither one is designed with your financial wellbeing in mind. They are designed to be passed.