Breaking News: Richest Americans Getting Richer

"ttyymmnn" (ttyymmnn) 10/09/2019 at 10:00 • Filed to: None

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For the first time in US history, American billionaires payed a lower tax rate than you working class schlubs.

The relatively small tax burden of the super-rich is the product of decades of choices made by American lawmakers, some deliberate, others the result of indecisiveness or inertia, Saez and Zucman say. Congress has !!!error: Indecipherable SUB-paragraph formatting!!! , for instance, and cut taxes on !!!error: Indecipherable SUB-paragraph formatting!!! and !!!error: Indecipherable SUB-paragraph formatting!!! . Lawmakers have also !!!error: Indecipherable SUB-paragraph formatting!!! and allowed multinational companies to !!!error: Indecipherable SUB-paragraph formatting!!! .

But the tipping point came in 2017, with the passage of the !!!error: Indecipherable SUB-paragraph formatting!!! . That bill, championed by President Trump and then-House Speaker Paul D. Ryan, was a !!!error: Indecipherable SUB-paragraph formatting!!! : It lowered the top income tax bracket and slashed the corporate tax rate.

Don’t worry though. The trickle is bound to start soon.

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Ash78, voting early and often > ttyymmnn 10/09/2019 at 10:08

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There is definitely a problem, but some of these articles don’t help.

Key issue we need to address: Income inequality (Secondarily, getting lower-income people out of debt and into investments or assets besides cash).

Issue that the media focuses on: Wealth inequality.

We’re at the tail end of a 10-year bull market, and wealthy households are naturally in a great position there. That wealth was made possible, in part, by higher incomes. However, wealth does not equal income. This is especially true for retirees, who often have very little income, but good wealth levels from which to draw.

Anyway, I just wanted to drop that little nugget so everyone keeps that in mind with these articles. If we want to talk ridiculous salaries for CEOs or athletes, sure. But “the rich are getting richer” is pretty much a given whenever asset values are going up. It’s almost basic math.

The 1% are pretty much untouchable and not something most of us can aspire to. Aim for the 20% and see what they’re doing, since most of them are just regular people we can actually emulate.

fintail > ttyymmnn 10/09/2019 at 10:10

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In other news, water is wet.

I am sure breitbart/fox/reason.org/heritage/worldnet etc will have something to refute this by Friday.

But they earned it! Built it themselves!  Daddy had no role in any of it. Why do you hate people who make more than you? Atlas shrugged. A rising tide lifts all yachts.

Wrong Wheel Drive (41%) > ttyymmnn 10/09/2019 at 10:10

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The only trickle happening is urine 

Wacko > ttyymmnn 10/09/2019 at 10:11

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So is this America being Great again?

jimz > ttyymmnn 10/09/2019 at 10:14

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there is a trickle-down here.  It’s us getting our heads pissed on. 

facw > ttyymmnn 10/09/2019 at 10:14

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Not surprising that big tax cuts for the rich lead to the rich paying less in taxes.

For Sweden > ttyymmnn 10/09/2019 at 10:14

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Repeal Sales, Gas, and Payroll taxes.

Raise income taxes to compensate

Problem solved

Dr. Zoidberg - RIP Oppo > ttyymmnn 10/09/2019 at 10:19

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Too Big to Fail

Spanfeller is a twat > Ash78, voting early and often 10/09/2019 at 10:21

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The thing is, wealth AND income matter. A better -not equal, just less polarized - distribution of both would make the American economy more competitive, and Americans happier, and healthier.

If only EssExTee could be so grossly incandescent > ttyymmnn 10/09/2019 at 10:21

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What a coincidence that the legislation our government creates seems to benefit the people that are running our government.

If only EssExTee could be so grossly incandescent > For Sweden 10/09/2019 at 10:21

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You thin k the people in Congress are really gonna  vote to increase their own taxes?

Ash78, voting early and often > Spanfeller is a twat 10/09/2019 at 10:22

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You are correct, but in terms of policy (mainly taxation, but also corporate governance) it’s much easier to manage the income side of things.

Forcible wealth redistribution tends to create revolutions. It can happen, it just has to happen slowly enough that people don’t feel immediately cheated.

I like cars: Jim Spanfeller is one ugly motherfucker > ttyymmnn 10/09/2019 at 10:22

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wow this is so surprising

punkgoose17 > Ash78, voting early and often 10/09/2019 at 10:22

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There should be no taxes on income below the poverty line is where I want to start.

davesaddiction @ opposite-lock.com > ttyymmnn 10/09/2019 at 10:25

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The capital gains tax clearly needs a (more) progressive structure like normal income tax...

Ash78, voting early and often > punkgoose17 10/09/2019 at 10:25

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There already are very few....a lot are net recipients of tax credits there. I’m a believer that you have to at least give some impression of fairness if you want the high earners (not “the wealthy”) to pay more.

I think we should outlaw sales tax on groceries and medicine at the Federal level and mandate it for all 50 states . That’s along the lines of your idea, and very hard to argue against. I currently pay 9.5%-10% across the board.

facw > Ash78, voting early and often 10/09/2019 at 10:26

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These are essentially the exact same thing. We aren’t talking about grandmas living off savings here, that level of wealth is far below the notice of any of the wealth-based proposals being talked about. If you have very high wealth, you almost certainly have very high income. It’s simple fact that under current economics for reasonable investments the growth of capital is going to exceed the growth of wages, leading to ever increasing inequality. If you wanted to, you could address this with the progressive income tax, but it becomes critical to consider income from capital the same as income from labor, and the system has been gamed so that is not the case, income from capital is taxed much lower, and not progressively. Still it’s something that could be done. The reason why taxing wealth is better is because while a progressive tax on income discourages people from seeking additional wealth, a progressive tax on wealth encourages investment of that wealth, helping the broader economy.

Also note that under Warren’s tax plan, no one living off a fixed sum is horrible screwed. The amount taxed is small enough that investment should easily offset it and then some, leaving plenty for living expenses. Bernie’s plan is more aggressive, so people might have trouble maintaining fortunes above $1B, but that level of wealth still provides a basically unfathomable level of comfort.

For Sweden > If only EssExTee could be so grossly incandescent 10/09/2019 at 10:27

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Some are advocating for a wealth tax, so maybe?

davesaddiction @ opposite-lock.com > punkgoose17 10/09/2019 at 10:27

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I’d like to see a nationwide abolition of tax on food.

Also, high gas taxes in certain states are actually regressive (affecting low-income folks more than the wealthy).

Bman76 (hates WS6 hoods, is on his phone and has 4 burners now) > ttyymmnn 10/09/2019 at 10:28

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When you realize that “corporate profits” is just a fancy way of saying “underpaid wages”

For Sweden > Ash78, voting early and often 10/09/2019 at 10:28

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Have seen local council meetings on property taxes, can confirm they spark revolutions

davesaddiction @ opposite-lock.com > For Sweden 10/09/2019 at 10:29

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I don’t think sales (consumption) taxes are necessarily bad, but food shouldn’t be taxed. Gas taxes are definitely regressive.

For Sweden > davesaddiction @ opposite-lock.com 10/09/2019 at 10:30

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Sales taxes dis proportionally impact the poor

davesaddiction @ opposite-lock.com > Wacko 10/09/2019 at 10:31

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Pretty great for Trump and his fellow billionaires...

It’s sickening to watch him enrich himself and his kids from the Oval Office.

Bryan doesn't drive a 1M > davesaddiction @ opposite-lock.com 10/09/2019 at 10:31

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Yep, here in WA there is no income tax, so we have high gas and sales taxes to make up for it. Very regressive to anyone with basic math / budgeting skills.

Spanfeller is a twat > Ash78, voting early and often 10/09/2019 at 10:32

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There is a balance to be found somewhere... and said balance is not static... there will never be a “perfect” tax policy... just one more adequate to the economic situation. 

Ash78, voting early and often > facw 10/09/2019 at 10:32

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I have to admit, my eyes start to glaze over as we cross over from the 10% to the 1% because the numbers are just so staggering up there. I’m not saying people should never strive to be mega-ultra-wealthy, just that I don’t get that level of ambition and opulence.

Our family gives more to charity than we have left over at the end of the year (which is often negative or break even, to be completely honest). It’s just about priorities. In fact, there hasn’t been a year in the past decade where our charity hasn’t exceeded our savings. I just realized that.

In general (let’s ignore the 1% for a moment) I dislike the idea of taxing wealth because I think of homeowners whose property doesn’t generate income, but does generate a tax bill. That’s seems almost medieval. A little bit less so if we’re talking about investments, but if those are held for retirement, where should people get the income to pay it? It’s a conundrum.

Income tax seems to be popular just because of tradition.

I still don’t get why sales taxes (eg Fair Tax) haven’t taken over more. It would be a hard transition, but tying tax revenues to actual spending (minus some stipend for basic necessities, similar to UBI) seems logical to me. Of course, we’d have to start the whole world over from scratch, including how politicians prefer to buy their votes :)

ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) > ttyymmnn 10/09/2019 at 10:33

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Eat the rich.

Spanfeller is a twat > punkgoose17 10/09/2019 at 10:33

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Here you don’t pay taxes or social security until you earn a bit over twice the minimum wage.

fintail > Ash78, voting early and often 10/09/2019 at 10:34

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Socio-economic chasms also breed revolutions, these have actually occurred numerous times in history.

Class warfare is real, and it is obvious who declared war on who, and who won.

davesaddiction @ opposite-lock.com > For Sweden 10/09/2019 at 10:34

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So, maybe if you make below a certain income, you get a tax-exempt card to swipe or something? I don’t know.

Getting rid of sales tax and increasing income tax doesn’t incentivize people to save (not spend).

facw > Ash78, voting early and often 10/09/2019 at 10:35

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No income taxes, but still payroll taxes, and of course when you are that poor, you are getting hit hardest by sales tax since you spend all your income.

Spanfeller is a twat > For Sweden 10/09/2019 at 10:35

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Replace sales tax for a luxury goods tax.... 

davesaddiction @ opposite-lock.com > Bryan doesn't drive a 1M 10/09/2019 at 10:36

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Get lots of retiree transplants up there?

facw > Ash78, voting early and often 10/09/2019 at 10:42

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That’s why these wealth taxes start high. Warren’s starts at $ 50M (so if you have $50M and one dollar in wealth, you pay the wealth tax on that one dollar). How many people not in the top 1% of income (~ $1.3 M/year) do you think have $50M in non-income generating assets? I’m not crying tears for someone’s whose $100M mansion/penthouse isn’t generating income so they lose a little money on it.

Yang does actually support a VAT, and there are some real advantages to that. The problem is that it is highly regressive. The poor, who spend all of their income get hit with the full force, while the rich who invest almost all of their income pay only a tiny percentage. This dynamic means that even if you used it to fun universal basic income, you’d still most be taking from the middle class while leaving the rich nearly untouched.

jimz > davesaddiction @ opposite-lock.com 10/09/2019 at 10:46

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what is that map supposed to represent? there’s literally no labeling or legend whatsoever.

Ash78, voting early and often > facw 10/09/2019 at 10:47

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Thanks for the education, I haven’t been keeping up with these proposals lately. The funny thing about wealth is that most of the electorate will gladly get behind taxing the 0.01%. Even the 1%-ers are like “Are you kidding me?”

The VAT is a little different than the Fair Tax idea because VAT is applied multiple times across the supply chain (as I understand it), but one common theme we have to overcome is that everyone — rich or poor — needs to get some monthly cash to offset the taxes on basic necessities. Last I read, it was around $500 or so (per month), and that’s purely to offset the embedded 20%+ sales taxes on basic necessities for everyone. Basically a rebate.

The idea works well if we can truly eliminate income tax, but it’s a lot harder to unwind the rest of the payroll taxes, too. I can’t even imagine the accounting required.

For Sweden > davesaddiction @ opposite-lock.com 10/09/2019 at 10:48

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Cool, I'll hire poor people as personal shoppers. Job creation!

For Sweden > Spanfeller is a twat 10/09/2019 at 10:49

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What's a luxury

punkgoose17 > davesaddiction @ opposite-lock.com 10/09/2019 at 10:49

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TIL some states tax groceries.

https://www.cbpp.org/research/state-budget-and-tax/which-states-tax-the-sale-of-food-for-home-consumption-in-2017

davesaddiction @ opposite-lock.com > jimz 10/09/2019 at 10:50

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Haha - good point... Fixed. Guess I assumed everyone knows everyone retires in Florida, so green = good.

https://www.kiplinger.com/tool/retirement/T055-S001-state-by-state-guide-to-taxes-on-retirees/index.php

If only EssExTee could be so grossly incandescent > For Sweden 10/09/2019 at 10:51

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Even if they’re taxed the rich will still find ways to avoid paying them, which is a shame because taxing the rich WORKS. I live in one of the most money places on the Eastern s eaboard, yet our property taxes are some of the lowest in the state. Why? Because the tax income off of the handful of $10 million+ properties gives the town all the money they need. We need something like this  to happen across the board.

If the wealthy could just be honest about their income instead of hiding it in charities amd o ffshore accounts that money could be used to fix a lot of problems in this country.

Thomas Donohue > For Sweden 10/09/2019 at 10:51

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Don’t hire too many, and make sure they are contract or part-time employees. Otherwise you’ll have to provide health benefits!

If only EssExTee could be so grossly incandescent > ttyymmnn 10/09/2019 at 10:52

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“Zucman" sounds like Mark Zuckerberg's self-inserted hero in a comic book.

davesaddiction @ opposite-lock.com > punkgoose17 10/09/2019 at 10:54

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Yeah, it’s pretty dumb...

Oklahoma’s Sales Tax Relief Credit, also known as the grocery tax credit, is intended to offset the state sales tax paid on groceries. The credit of $40 per household member is available to households with income up to $50,000 for tax filers who are elderly, have a physical disability or claim a dependent, or $20,000 for other households . The amount of the credit has been left unchanged since 1990, while its income eligibility limit was last expanded in 1998.

Spanfeller is a twat > davesaddiction @ opposite-lock.com 10/09/2019 at 10:59

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Saving is bad for a consumer society

Spanfeller is a twat > For Sweden 10/09/2019 at 10:59

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Your posts are 

Ash78, voting early and often > punkgoose17 10/09/2019 at 11:00

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Most states tax groceries, but most of them are at least a little below the “full” sales tax rate. Florida is zero, which is rare.

facw > Ash78, voting early and often 10/09/2019 at 11:00

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Yeah, the VAT is a bit different, but it basically works out as a sales tax.

Any time you go from a progressive tax, like the income tax, to a regressive tax (like the sales tax), you are probably transferring burden to the poor. After all think of Romney’s 47% who pay no taxes (probably about right for Federal income taxes, but of course people pay other taxes). If you eliminate the income tax and instead raise revenue with a non-progressive tax, you almost certainly make most of them pay more, even though with a few Trump-like exemptions, most of them pay no federal income taxes because their earnings are too low.

I’m not a fan of the income tax in general though, I’d rather see a progressive tax on wealth, and strong taxes on inheritance and large gifts.

davesaddiction @ opposite-lock.com > For Sweden 10/09/2019 at 11:02

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For most of the world? Toilet paper.

davesaddiction @ opposite-lock.com > Spanfeller is a twat 10/09/2019 at 11:03

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Sad, but true.

facw > davesaddiction @ opposite-lock.com 10/09/2019 at 11:03

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Here in MA we exempt food (except restaurant food) and clothing costing less than $175

davesaddiction @ opposite-lock.com > facw 10/09/2019 at 11:04

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That’s the way it should be. Wonder how they determined the $175 cut-off?

Wacko > davesaddiction @ opposite-lock.com 10/09/2019 at 11:06

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I still can’t believe you guys voted him in.

facw > For Sweden 10/09/2019 at 11:07

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Gas taxes are regressive, but also probably necessary to account for gas’ negative externalities (they probably should be a lot higher than they are right now to do that) . A cap and trade would have much the same effect on prices. You are absolutely right that it would be regressive either way, so I think you’d want to redirect much if not all of the revenue to a per-capita stipend (which would reward people who are efficient, and penalize those who aren’t, hopefully at a level that would encourage better decisions, but not be instantly ruinous).

If you raise income taxes, you really need to make sure to tax income from capital progressively, instead of shunting it off into a separate low-tax category. The wealthy don’t make their money from labor income.

SBA Thanks You For All The Fish > Ash78, voting early and often 10/09/2019 at 11:09

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Great comment, Ash. Yeah, I always giggle when I hear “we need a fair tax system here, you know, like they have in Sweden”.

Suppose the people proposing that will still be in favor once they figure out that the Swedish system is pretty much a flat tax, starting at very low incomes well down into the poverty band, set at 32%?

For Sweden > davesaddiction @ opposite-lock.com 10/09/2019 at 11:12

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It's too evil to hate

For Sweden > Spanfeller is a twat 10/09/2019 at 11:12

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Oh no

davesaddiction @ opposite-lock.com > Wacko 10/09/2019 at 11:12

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It’s been SMH for the past 4 years... I wonder how many who voted him were like “how bad could it be”? Well, now you know.

Crazy to me that he actually still has a 40% approval. Confirmation bias is a real thing...

Spanfeller is a twat > For Sweden 10/09/2019 at 11:18

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Warren is coming for you 

For Sweden > Spanfeller is a twat 10/09/2019 at 11:19

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She’s running

Textured Soy Protein > Ash78, voting early and often 10/09/2019 at 11:33

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You say we need to address income and wealth inequality. Guess what? One of the main ways to do this is to Fix. The. Fucking. Tax. Laws. 

Income/wealth inequality are inextricably linked to taxes. Taxes aren’t the only factor but they contribute hugely.

The rich in the US, over time, have been paying less and less taxes on both income and wealth, thanks to a Republican party that has been preaching the myth of trickle-down economics for decades.

But how has this mythical trickle-down economics helped the lower rungs of the socioeconomic ladder? Hmm let’s see!

I’ll leave it to the authors of the report with the chart above to explain the difference:

The income-inequality trajectory observed in the United States is largely due to massive educational inequalities, combined with a tax system that grew less progressive despite a surge in top labor compensation since the 1980s, and in top capital incomes in the 2000s. Continental Europe meanwhile saw a lesser decline in its tax progressivity, while wage inequality was also moderated by educational and wage-setting policies that were relatively more favorable to low and middle-income groups. In both regions, income inequality between men and women has declined but remains particularly strong at the top of the distribution.

Employers require specific types of education to get specific types of jobs, and in the US it’s much harder and more expensive to get that education compared to many other developed nations with cheap/free higher education systems.

But here in MURRICA we’re too busy worshiping the false idol of the free market to provide educational assistance like those other countries, or to implement a tax system that taxes higher incomes and wealth at higher rates.

Even if we massively revamped the higher education system to give more people more opportunities to earn the qualifications needed for better-paying jobs, we’d still need to raise taxes on the rich. 

Wacko > davesaddiction @ opposite-lock.com 10/09/2019 at 11:41

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Hats off to the secret service for doing their jobs even with the orange elephant in the room.....

facw > For Sweden 10/09/2019 at 11:51

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For Sweden > facw 10/09/2019 at 11:56

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Someone buy her a scooter already

BigBlock440 > facw 10/09/2019 at 12:10

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a progressive tax on wealth encourages investment of that wealth, helping the broader economy. 

Do you not consider investments “wealth”? A progressive tax on “wealth” would mean that as people invest, and their investments grow, they’ll pay an increasing larger portion to taxes. How exactly will that encourage investment?  And if you exclude investments from a wealth tax, you’re right back here where “the rich are taxed at a lower rate” since all of their income is from investments, not a salary.

Nick Has an Exocet > For Sweden 10/09/2019 at 12:15

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Warren’s wealth tax isn’t a wealth tax. It’s basically a tax on the rich. That’s kind of like when marketing people call an SUV “a breakthrough in supercar performance”.

An actual wealth tax (which I’m okay with if it is applied equally  and you abolish all other taxes) taxes the sum of a person's wealth. Every year you would pay tax on your house, car, income, heirlooms, pokemon cards, etc. 

BigBlock440 > ttyymmnn 10/09/2019 at 12:16

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Don’t worry though. The trickle is bound to start soon. 

See this thread:

https://oppositelock.kinja.com/1838906459

Nick Has an Exocet > ttyymmnn 10/09/2019 at 12:17

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So if the rich got richer, did the government get poorer? 

facw > BigBlock440 10/09/2019 at 12:18

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Investing is encouraged because if you don’t invest, your money will begin to erode.

Also you seem to think that taxing that wealth destroys it. It doesn’t. It redistributes it, largely to people who are more likely to spend it which benefits the economy overall.

What you don’t want is the rich parking their money in low return investments, and a wealth tax discourages that. The Fed’s interest rate actually has much the same goal, the reason we don’t shout for zero inflation is that that discourages investment and encourages hoarding. There are advantages and disadvantages to that approach. For example o n one hand it’s much harder to hide from inflation, on the other higher inflation may discourage hoarding but it also makes lending problematic, as well as lowering everyone’s income (though in theory businesses should be willing to increase it in the classic wage/price spiral).  

MrSnrub > Ash78, voting early and often 10/09/2019 at 12:22

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I think f orcible redistribution usually happens after the revolution. See: Russia, China, Cuba, post-colonial Africa. Although I read an interesting article a while back showing that sometimes revolutions are kicked off when the powers that be willingly grant small concessions beforehand.

MrSnrub > fintail 10/09/2019 at 12:47

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Poor people are are just lazy, duh . Are there no workhouses? Are there no prisons?

BoxerFanatic, troublesome iconoclast. > ttyymmnn 10/09/2019 at 12:59

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A: You should realize that trickle-down economics has absolutely NOTHING to do with tax dollars, other than tax dollars taking money out of the economy, and wasting probably 75 cents on the dollar of that value on bureaucracy and waste.

Trickle-down economics was a simplified explanation of how economics ALWAYS works, but was made fun of by Reagan’s opponents. ALL business uses capital to produce goods and services that add value, and employ people in the process of creating, distributing, handling, and selling goods and services.

Without capital to spend on doing business... NOBODY succeeds.

B: You should also realize that the wealthy have NEVER paid as much in taxes as income earners. What you are seeing in this analytic measurement, is that those 400 families are finding more and more ways to classify accumulation as wealth, rather than income, not just reduced tax rates on income. Raising income tax rates also drives tax sheltering, just in different methods.

Income is taxed, wealth is not. If you get well enough off and accrue enough wealth to live on, it is inherently advantageous to convert compensation away from income that is taxable, and into methods of expanding and sustaining wealth. Like incorporation. If you can operate your life like a business, where bills and expenses for one’s lifestyle are paid as operating costs, and very little profit is shown as personal income, then there isn’t any income to tax, and all that money instead is used as operating capital for lifestyle, and weath accumulation.

Of course Warren Buffet pays less income tax than his secretary, he is wealthy, where his secretary gets paid wages.

This is one of the STRONGEST arguments for a fair/flat tax on consumption and retail sales, not income.

A flat rate of taxation on what people buy, above perhaps some very basic staple items to be exempted, would be very easy to implement, would be inherently objectively fair, can be planned upon, and requires no personal tax return filing.

Plus it affects pretty much all spending, regardless if the money is sourced from wages or from wealth.

A 10 dollar toy, a 100 dollar appliance, a thousand dollar TV, a 10K motorcycle, a 100K luxury car, a million dollar luxury item, a 10 million dollar plane, a 100-million dollar home... X% tax.

But in the mean time, income (and also interest from saving, and capital gains, and inheritance) is just as un-taxed as wealth, and most people’s income would go up by 30-50%... by not having it taken in income tax.

however, the income tax amendment would have to be repealed, or re-amended to ensure that the federal government could NOT constitutionally double tax on both income and expenditure.

Taxing the same money twice by the same entity should be legally barred, which is one reason that the death tax on inheritance is immoral, and should be illegal.

Right now, people wealthy enough, pay very little to no income taxes, and also likely find ways to pay little in sales taxes, while people working for a living have no recourse but to pay any taxes that the government levies.

People are the only entity that ever pay taxes. Organizations expense taxes to other organizations, or incorporate it as an expense into retail pricing that roll down into what PEOPLE pay.

BoxerFanatic, troublesome iconoclast. > For Sweden 10/09/2019 at 16:56

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Anything you tax, you essentially penalize.

Penalizing earning and saving is not a great idea. Penalizing spending is the lesser burden, and more equally applied and non-regressive.

It also has no impact on those who live on wealth, rather than income.

Frankly, repeal ALL taxes aside from sales tax, let everyone keep every dollar they earn, save, or are given...

Then tax at a flat rate when anyone spends at the point of sale. No tax returns, no muss, no fuss... X% of what you buy is tax.

It shouldn’t matter where money comes from, and everyone would pay taxes at an equal proportion, with the quantity being related to what they can afford to spend.

BigBlock440 > facw 10/18/2019 at 07:47

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Also you seem to think that taxing that wealth destroys it. It doesn’t. It redistributes it, largely to people who are more likely to spend it which benefits the economy overall. 

Which, as far as the person who is deciding where to put it is concerned, it’s gone.

Investing is encouraged because if you don’t invest, your money will begin to erode.

What you don’t want is the rich parking their money in low return investments, and a wealth tax discourages that.

I f they’re in low return investments, it’ll begin to erode so as you say, it would be discouraged. Adding increasing taxes to the higher returns would also erode that money, unless they invested in markets outside of the US, and keep their money there instead.