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OPINION | What’s a wealth tax worth?

WHY do liberals think rich people have money just lying around, like Scrooge McDuck swimming in a giant pool of gold coins? That’s the myth behind plans to tax Americans’ wealth, as Sens. Elizabeth Warren and Bernie Sanders both propose.

Ms. Warren wants an annual asset tax of 2 percent on households worth more than $50 million, and 3 percent if you’re worth more than $1 billion. Mr. Sanders would tax “extreme wealth” starting at 1 percent on households worth $32 million and topping out at 8 percent on those worth $10 billion or more. Whereas the Soviets confiscated wealth virtually overnight, at least Bernie will take a dozen or so years to pilfer most of your savings.

University of California, Berkeley professors Emmanuel Saez and Gabriel Zucman estimate that Mr. Sanders’s tax would raise $4.35 trillion over 10 years, while Ms. Warren’s would raise $2.75 trillion. But something seems fishy — oh, Messrs. Saez and Zucman advise both campaigns on their wealth-tax plans. I doubt they account properly for how levies on wealth would shrink the tax base. Can we get some outside audits please?

Even setting comical revenue projections aside, the wealth-tax idea doesn’t stand up to scrutiny. Never mind that it’s likely unconstitutional. Or that a wealth tax is triple taxation, heaped on top of a 21 percent corporate tax plus 20 percent capital-gains tax when someone sells shares to pay it. (I concede that it definitely would provide lifetime employment for tax lawyers.)

The most preposterous part of the wealth-tax plans is their supporters’ insistence that they would be good for the economy. Only in an upside-down world could anyone think “a wealth tax is pro-growth,” as a New York Times columnist has claimed.

Start with the spending side. If the Democrats gain the presidency and Senate, the wealth tax would help fund a phantasmagoria of new mandates, like the Medicare free-for-all and the blingy Green New Deal. The candidates will say most of the revenue would go toward education and infrastructure — both areas in which unions have overwhelming control over employment. C’mon, Liz and Bernie, we’re not that dumb.

The revenue side is even worse, as a wealth tax would suck money away from productive investments. Of course liberals in favor of taxation always trot out the tired trope that the poor drive growth by spending their money while the rich hoard it, tossing gold coins in the air in their basement vaults. As the Times put it, wealthy Americans supposedly have “more money than they know what to do with.” So just tax the rich and government spending will create great jobs for the poor and middle class.

This couldn’t be more wrong. As anyone with $1 billion — or $1,000 — knows, people don’t stuff their mattresses with Benjamins. They invest them. Sure, you might have some in a checking account that doesn’t pay interest; you don’t even get a toaster anymore! But if money’s in an account, it’s being invested.

Maybe it’s in a bank making local mortgage loans. Maybe in a money-market account that provides short-term funding to companies and municipalities. Maybe even in corporate or government debt. But most likely it’s in stocks or invested directly in job-creating companies that are doing new things and destroying the old.

A wealth tax takes money out of the hands of some of the most productive members of society and directs it toward the least productive uses. Sure, roads and bridges used to be productive — more than half a century ago, when Eisenhower’s interstate highway system was built. Education was also a fruitful investment back then, helping build an industrial workforce. But these causes are already funded by existing taxes on gasoline and property. Rather than drawing new revenue, the gaps in funding for infrastructure and education should be narrowed by cutting waste — like ever-growing teacher pensions and layers of administration.

Today the productivity is further up the value chain. To knock down the roadblocks to a more efficient economy, America needs investments in its 5G and fiber-optic networks and enterprise software and artificial intelligence. But wait, there are already people willing to invest in these areas, independent of the government — the same people the wealth taxes target.

So really, with no rational economic use, a wealth tax is big-government punitive class warfare. It’s obvious. Ms. Warren rails against Wall Street “looting” and considers private-equity firms “vampires.” Mr. Sanders’s website keeps a list of his “anti-endorsements,” from Jamie Dimon to Andy Puzder — a practical Who’s Who of successful job creators.

So what’s the right way to tax wealthy people? Robert Hall and Alvin Rabushka proposed a flat tax on income from employment, with no deductions save for a personal allowance. In fact they did it on the Wall Street Journal’s pages in 1981. The government would replace all taxes on corporate and personal income with a simple levy on total compensation. The op-ed even showed a postcard-size mock tax form.

The point is that existing taxes on interest, dividends and capital gains discourage the healthy savings that create jobs in the economy. These are effectively taxes on wealth — and we don’t need another one.