Kara Swisher captured the rage of leftists in Califorinia, in a recent posting, declaring “you made…all your money in California, you ungrateful piece of s***, you could figure out a way to pay more taxes, and we deserve the taxes from you, given you made your wealth here . . . so why don’t we just do shock and awe at this point, because you don’t seem to be availing yourself to thinking that you owe your state something more.”
Here’s a structured, worldview-based way to poke holes in the claim that billionaires should be happy to pay more taxes to a state “because they made their fortune there.”
Clarify and narrow the claim first
- Ask for a precise thesis: Is the argument that (a) they owe more than the legal tax because of gratitude, (b) the state is the primary cause of their wealth and thus entitled to extra payment, or (c) higher marginal rates will raise revenue without harmful side effects? Vague, shifting definitions make the claim unfalsifiable and immunized from critique.
Logical and normative problems
- Non sequitur from gratitude to coercive obligation: “You benefited here, therefore you must pay more than the general rule” jumps from a virtue (gratitude) to a special legal duty without a bridge principle. In rule-of-law systems, obligations arise from general, prospective rules, not ex post moralizing about who “owes” more than the law requires.
- Equality before the law vs ad hoc targeting: Singling out a disliked subgroup for “shock and awe” taxation abandons neutral, general rules in favor of retributive policy by status, which weakens legitimacy and invites tit-for-tat politics.
- Monocausal overreach: Attributing a fortune primarily to “the state” collapses a complex production function—entrepreneurship, risk-bearing, teams, capital markets, global customers, supply chains—into one cause. That’s base–superstructure oversimplification in reverse: it ignores multiple independent factors and feedback loops that also made the wealth possible.
- Category error: “Being happy to pay” is a statement about personal sentiment; using it to justify coercive extraction confuses voluntary virtue with enforceable duty. A state can tax by statute; it can’t demand a mandated emotion as proof of civic worth.
Economic and incentive concerns
- Mobility and behavioral response: High earners and owners are unusually mobile; when marginal rates or wealth-levies jump, some relocate, defer, or re-time income. If enough do, the static “more taxes = more revenue” assumption fails, and the jurisdiction loses both current revenue and future investment spillovers.
- Knowledge and calculation problems: Politically chosen “extra” taxes do not automatically map to efficient funding of public goods. Without clear price signals or competitive feedback, governments can misallocate the marginal dollar, delivering less value than taxpayers (or their philanthropy/investments) would have produced.
- Competitive federalism: States compete on tax, services, and regulatory climate. A shock-and-awe approach can erode the jurisdiction’s long-run attractiveness, shrinking the base and shifting costs onto less mobile residents.
- Benefit principle mismatch: The claim presumes the state’s contribution to a given fortune is large and unreciprocated. But large taxpayers already fund a disproportionate share of general services; there’s no clear evidence the marginal services they uniquely consume scale with the “extra” levy being demanded.
Causation and counterfactuals
- Counterfactual ambiguity: Would the entrepreneur have succeeded only in that state, or also (perhaps more easily) in a competing jurisdiction with different taxes/regulations/labor markets? Without a counterfactual, claims of state entitlement are speculative.
- Double counting the social contract: The state provided infrastructure and legal order, but those are financed by taxpayers (including the wealthy), and supplied in exchange for following general laws and paying posted rates. Treating legal compliance as an unpaid “debt” replaces contract-like reciprocity with open-ended moral claims.
Public-choice and governance risks
- Mission creep and entrenchment: Once political actors can label out-groups “ungrateful” to justify above-normal exactions, incentives tilt toward signaling and rent-seeking rather than efficient finance. Concentrated power to target taxpayers rarely self-limits without strong constitutional guardrails.
- Process vs outcome: Justifying exceptional burdens by outcomes (“we deserve more”) erodes process-based justice—general rules, predictability, and consent—and invites selective enforcement and regulatory retaliation.
Practical and ethical alternatives
- If the real aim is revenue for public goods, favor broad, predictable, general rules with clear cost–benefit tests and sunset reviews. This disciplines spending and reduces flight risk relative to emotive, targeted tax hikes.
- If the aim is civic contribution, voluntary philanthropy, prize mechanisms, or public–private partnerships can harness entrepreneurial discovery without coercive moralizing—and can be benchmarked for impact.
Questions that productively “poke holes” in the claim
- Definition test: What exactly is “owed” beyond legal tax, and by what principle would we calculate it? Would the same rule apply if the state’s net effect on a firm was negative (e.g., costly delays, harmful mandates)?
- Falsifiability test: What evidence would show the extra tax is counterproductive (e.g., net revenue loss after migration/deferral; investment decline)? If no evidence could, the claim isn’t empirical—it’s a moral stance dressed as policy.
- Mechanism test: Through what concrete mechanism does imposing higher rates on a narrow group improve welfare after accounting for behavioral response, administrative costs, and opportunity costs of public spending?
- Symmetry test: Should a state owe refunds or rebates when entrepreneurs generate large positive spillovers that exceed tax contributions? If not, why is the obligation one-way?
- Baseline test: Relative to peer states, what is the optimal top rate that maximizes sustainable revenue without undermining competitiveness, and what’s the evidence for that benchmark?
Bottom line
- The leap from “you built wealth here” to “you must be happy to pay extra taxes here” bundles moralizing, monocausal attribution, and optimistic revenue assumptions that don’t survive scrutiny on rule-of-law, incentive, and counterfactual grounds. A principled, general, evidence-tested tax regime—rather than emotive, targeted exactions—better aligns with fairness, growth, and stable public finance
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