Taxing Wealth: What Could Go Wrong?

In this episode of The Economist Next Door, host Paul Mueller is joined by AIER research fellows Thomas Savidge and Julia Cartwright to examine the push for wealth taxes in the United States and around the world. They explain how wealth taxes differ from traditional taxes on income and consumption, and what history reveals about their real-world effects. Drawing on examples from California, New York, and Europe, the discussion highlights capital flight, revenue volatility, and the unintended consequences of taxing accumulated wealth. The episode also tackles common claims about billionaires "not paying their fair share," unpacks the complexity of the tax code, and explains why taxes aimed at the ultra-wealthy rarely stay confined to their original targets. From the Smaug fallacy to the Tiebout Effect, the conversation introduces listeners to the economic ideas behind the debate—and shows how a seemingly "common sense" policy can carry serious consequences for growth, investment, and living standards.