The Wall Street Journal - 14.11.2019

A14| Thursday, November 14, 2019 THE WALL STREET JOURNAL.

Wealth Taxes, Incentives and ‘Free’ Benefits

Regarding your editorial “Where

Wealth Taxes Failed” (Nov. 5): One

major difference between European

countries and the U.S. is that the top

marginal tax rate is already much

higher in the European countries you

cite. A wealth tax in a country like

Sweden, with a 57% marginal tax rate,

isn’t comparable to a country like the

U.S., with a 37% maximum rate.

While a wealth tax would create a

double taxation, as you point out, the

moral objective of it and the progres-

sive income tax is to reduce the gap

between the haves and the have-nots.

Citizens of developed countries like

Sweden report longer lifespans and

greater overall happiness than citi-

zens of the U.S. It is no coincidence

that those European countries have a

more progressive income-tax schedule

and a more inclusive health-care sys-

tem. A wealth tax may not be the

right tactic, but the fact remains that

our current system of taxes and bene-

fits has created a historic gap be-

tween the haves and have-nots that

runs counter to the American ideal of

life, liberty and the pursuit of happi-

ness. We can and must do better.

TOMPALMER

Wilmette, Ill.

Set aside for the moment all the

reasons wealth taxes don’t work, and

suppose Sens. Elizabeth Warren and

Bernie Sanders actually deliver on

their plans. As you note, “His advisers

brag that this could wipe out half a

billionaire’s wealth in 15 years,” which

means we’ll soon be getting just half

the wealth-tax revenue. Who’s going

to make up that revenue loss? Are we

going to cut spending to match the

reduced revenue? Does Medicare for

All get cheaper over time as the bil-

lionaires are liquidated? Confiscatory

taxes on the rich are delayed tax in-

creases on everyone else.

KEVINCLARK

Franklin, Tenn.

How will the Warren/Sanders

wealth tax differentiate between

wealth accumulated from private de-

fined-contribution pension plans

(401(k), 403(b)) and savings, and the

defined-benefit pension plans of pub-

lic-sector employees? The net present

value of the wealth needed to gener-

ate a particular return should be

taxed the same for all individuals,

whether it is in private or public

hands. If a civil servant gets a

$100,000 pension, his or her wealth

tax should be the same as a private

citizen with enough savings to gener-

ate that amount. Will the potential

wealth of a defined-benefit pension’s

distributions over a lifetime be in-

cluded in their wealth-tax formulas?

Or will the capital behind public-sec-

tor employees wealth from a pension

be excluded?

JOHNILCISIN

Omaha, Neb.

The Democratic senators’ proposals

will quickly run out of billionaires and

millionaires to tax. That class of tax-

payer has access to squads of lawyers

and accountants to protect them.

When that tax source doesn’t meet

the trillions that are hoped for, the

target will then shift to the middle

class. Imagine a middle-class taxpayer

on a fixed income who owns a

$200,000 house. A 2% annual wealth

tax would require a cash payment of

$4,000 a year. I hope this idea will

never be adopted.

DOUGHELLAND

Lakewood, Wash.

In 1991 the George H.W. Bush ad-

ministration rolled out the Luxury

Tax. This was a levy on the toys of the

wealthy: boats, private planes, furs,

jewelry and cars. Democrats cheered

because the rich were going to finally

pay their fair share. The thought pro-

cess was simple—wealthy people have

so much money, they will simply pay

the tax. Wrong.

The impact of the tax was immedi-

ate. Yacht retailers suffered sales

losses of 77%. Boat builders had to lay

off 25,000 workers. Wealthy buyers

either directed their capital elsewhere

or bought foreign products not sub-

ject to the tax. The middle class was

forced to bear the brunt of the result

of this legislation, as many in that

group lost their livelihood. The tax

was eventually repealed with biparti-

san support. Once the dust had set-

tled, it was rumored that more money

was spent on unemployment compen-

sation than was actually collected in

taxes.

DAVIDR.BREUHAN

Bloomfield Hills, Mich.

It doesn’t surprise me to read Eliz-

abeth Warren’s proposal for a mini-

mum 40% exit-tax rate for Americans

who choose to renounce their citizen-

ship. Given her other policies, that tax

proposal makes clear to me she views

the U.S. government relationship to

its citizens to be one of master to in-

dentured servant. Even the commu-

nist Chinese government charges a

tax slightly less then $40 for its citi-

zens to renounce their citizenship.

KEVINA.CAPPS

Corona del Mar, Calif.

A 40% exit tax for renouncing U.S.

citizenship might be reasonable

given the Sanders/Warren vision for

America.

ANDREWBLEKE

Atlanta

LETTERS TO THE EDITOR

Letters intended for publication should

be addressed to: The Editor, 1211 Avenue

of the Americas, New York, NY 10036,

or emailed to [email protected]. Please

include your city and state. All letters

are subject to editing, and unpublished

letters can be neither acknowledged nor

returned.

“Don’t you ever again run off to get

your oil changed without telling me.”

THE WALL STREET JOURNAL

Drug Prices Aren’t Too Low for Americans

David R. Henderson and Charles L.

Hooper claim that drug discount pro-

grams like Medicaid’s “best price” and

the 340B Drug Pricing Program drive

prices down to a point where manufac-

turers are no longer willing to produce

a drug (“Sometimes Drug Prices Are

Too Low,” Nov. 1). Yet the majority of

drug shortages involve generic inject-

able medications used mainly in inpa-

tient settings where these outpatient

drug discount programs don’t apply. A

recent report by the FDA found more

than 60% of shortages are caused by

manufacturing or quality problems.

Even if Medicaid and 340B dis-

counts applied to the drugs in short-

age, those discounts represent a very

small part of overall drug spending

and are unlikely to have a measurable

impact on manufacturer decisions on

how much of a drug to make. A recent

Pew study found that 340B discounts

reduced overall drug manufacturer

revenues by only 1.4%.

The 340B program was created by

Congress in 1992 to lower the cost of

outpatient drugs for nonprofit and

public hospitals, clinics and health

centers. The savings help those safety-

net providers care for more patients

with low incomes and those living in

rural communities at no cost to tax-

payers. Hospitals participating in 340B

provide 60% of all uncompensated care

while representing only 38% of acute-

care hospitals. In rural areas of the

country, 340B is often the difference

between a hospital remaining open or

closing its doors. To qualify for dis-

counts, hospitals must prove—annu-

ally—that low-income patients make

up at least 27% of their caseload. In

fact, the national average for 340B

hospitals is 42%.

Pharmaceutical manufacturers need

to work with federal policy makers to

find ways to improve safety and sup-

ply without raising prices for those

who can least afford them.

MAUREENTESTONI

President and CEO, 340B Health

Washington

iPad Pseudo-Tax Money Is

Ingenious Progressive Coup

Your editorial “Affordable Rents at

the iPad” (Nov. 6) describes the bil-

lions of dollars Apple and other big

California tech giants are contribut-

ing to increase availability of “afford-

able housing” in the Silicon Valley

area. So now I need to consider when

I shell out $900 for my next iPhone

that I will be paying a tax to subsi-

dize the amelioration of convoluted

reasoning in California that creates

most of its problems. That system

has invented a new concept: a free-

market tax-collection mechanism for

a muddled progressive state that

manages to dredge in revenues from

around the country and world.

JAMESW.BENEFIEL

Dunedin, Fla.

Pepper ...

And Salt

Humansplaining Explained

I might be wrong, but I think Colin

Fleming just humansplained humans-

plaining (“Actually, the Problem Is

‘Humansplaining,’” op-ed, Nov. 4).

BRENDANKELLY

Dublin, Ireland

The Banality of Impeachment

H

ouse Democrats went public Wednes-
day with what the media are calling
“historic” impeachment hearings, but
what strikes us is the pre-
cooked nature of the exercise.
This isn’t a search for truth.
It’s a set-piece production to
promote a foregone conclu-
sion. Democrats are turning
impeachment into another
partisan banality, and the country won’t be
better for it.
House Intelligence Chairman Adam Schiff
plans only five days of public hearings, and he
has already heard the witnesses in secret. Mr.
Schiff won’t allow most witnesses requested
by Republicans, notably the whistleblower who
started it all and Hunter Biden. Perhaps Demo-
crats have some new bombshell they’ve uncov-
ered, but that has not been the pattern. What
they learn, they quickly leak to the impeach-
ment press.
iii
The impeachment case—after the failure of
non-collusion with Russia and the non-obstruc-
tion of Robert Mueller—now boils down to
President Trump’s dealings over a few weeks
this summer with new Ukraine President Vo-
lodymyr Zelensky. Readers who want to save
time should read Mr. Schiff’s opening state-
ment Wednesday because it offers the most
damning interpretation of events.
Mr. Schiff’s claim is that Mr. Trump sought
to “condition, coerce, extort or bribe an ally
into conducting investigations to aid his re-
election campaign.” He did this by having his
Administration threaten to withhold U.S. mili-
tary aid and deny an Oval Office meeting until
Mr. Zelensky publicly announced a corruption
probe. That sums up the case.
We are not defending Mr. Trump’s phone
call with Mr. Zelensky or any plan to deny mili-
tary aid. Sending his personal lawyer, Rudy
Giuliani, to lobby Ukrainian officials outside
formal U.S. diplomatic channels was dumb, ran
counter to Mr. Trump’s own policy, and was ul-
timately self-destructive.
Mr. Giuliani was hardly quiet about his ef-
forts, and it appears that most of the Ameri-
can bureaucracy had heard something about
it. Mr. Trump’s former national security ad-
viser, John Bolton, opposed it. In the end the
aid was delivered and Mr. Zelensky never be-
gan a corruption investigation. Like much else
in this Administration, Mr. Trump’s worst im-
pulses were blocked.
Mr. Schiff says this is still an impeachable
“abuse of power” because criminals can be
prosecuted if their attempts fail. But there is
no underlying crime here. Democrats have
given up calling it a “quid pro quo,” which must
not have played well in polling. Instead they
are using “extortion” and “bribery” to suggest
a crime without citing any specific statute.
The Justice Department has already dis-
missed the bribery claim because there was no
“thing of value” exchanged. And the extortion

charge is absurd regarding U.S. aid to a foreign

government.

American Presidents have long asked foreign

leaders for actions or policy

cooperation that serve a Pres-

ident’s personal political in-

terest. Recall when President

Obama was caught in 2012 on

a hot mic telling then-Russian

President Dmitry Medvedev to

ask Vladimir Putin to give him diplomatic

“space” until after Mr. Obama’s re-election

when he would have more room to maneuver

on the issue of missile defenses. He was under

fire from Republicans for being soft on Russia,

so that surely was a request in Mr. Obama’s per-

sonal political interest.

Appropriate requests to foreign leaders in-

clude reducing corruption, which was one of

Mr. Zelensky’s campaign planks. Joe Biden and

Hunter Biden don’t have immunity from such

a probe simply because Joe Biden is running

for office against Mr. Trump.

If Democrats think that mentioning the Bi-

dens is impeachable, they should also investi-

gate the political context in which Mr. Trump

made this request. That would include calling

Hunter Biden, as well as Alexandra Chalupa,

a contractor for the Democratic National Com-

mittee who allegedly worked with Ukrainian

officials in 2016 on opposition research

against the Trump campaign. If there’s nothing

to Mr. Trump’s claims here, wouldn’t this

boost the Democratic impeachment case with

the American public?

Mr. Trump’s actions also can’t be separated

from Democratic attempts in 2016 to use Rus-

sian disinformation to unleash an FBI counter-

intelligence operation against the Trump cam-

paign. This was one of the dirtiest political

tricks in history, yet Democrats and the im-

peachment press justify it to this day.

Mr. Trump’s Giuliani gambit failed amid op-

position from his own government. The Clin-

ton-financed Steele dossier worked in trigger-

ing an FBI probe that eventually morphed into

the Mueller investigation that undermined the

Trump Presidency for two years. When it

comes to inviting foreign meddling in U.S. poli-

tics, Democrats and the impeachment press

have a double standard.

iii

In a healthier political culture, Democrats

would be using the Ukraine episode as an argu-

ment against Mr. Trump’s re-election. How can

you trust his foreign-policy judgment in a sec-

ond term when he won’t have the check of an-

other re-election?

Instead Democrats have pulled out the

constitutional bazooka of impeachment. They

are doing so in partisan fashion, contrary to

their earlier pledges, and in a political rush

to beat the 2020 political calendar. On the ev-

idence and the process to date, they are turn-

ing impeachment into a routine political

weapon, and future Presidents of both parties

will regret it.

The hearings are a

pro-forma march to a

foregone conclusion.

Washington’s Affirmative Repudiation

S

upport in polls for racial preferences
varies wildly depending how the issue
is framed. Yet when racial-preference
systems have been put di-
rectly to voters in statewide
referendums with real conse-
quences, majorities have al-
most always said no. Last
week Washington state’s lib-
eral electorate continued that
trend, narrowly overruling the Legislature’s bid
to reintroduce preferences in public education
and employment.
In 1998 the Evergreen State voted by a 16-
point margin to ban racial preferences. But this
spring the state’s increasingly progressive Demo-
cratic Party, which controls the Legislature, re-
pealed the ban and created a state diversity board
to oversee a new preference system. Recognizing
these policies could come at their expense, many
Asian-Americans in particular mobilized to de-
feat them. Opponents collected enough signa-
tures to force Referendum 88 onto the Nov. 5 bal-
lot so voters could get a say.
The pro-preferences side outspent oppo-
nents and benefited from support of the state’s
political establishment including Governor Jay
Inslee, Senator Patty Murray, three former gov-
ernors and the Seattle Times. Yet as of last
count it was losing by about 16,000 votes, or
just under 1%, even after late ballots from King
County in Seattle narrowed the margin from
election night. The pro-preferences group WA
Fairness conceded late Tuesday.
The defeat highlights a dilemma for propo-

nents of allocating jobs and places in school by

race. On the one hand white liberals are grow-

ing more supportive of race-based policies. Cal-

ifornia Democrats have been

making noises about repealing

the ban on preferences that

has been in place in the

Golden State since 1996.

Yet the progressive states

where such measures might

succeed are also home to disproportionate

numbers of Asian immigrants and their chil-

dren. They know that in practice “diversity”

likely means they’ll need to clear higher hurdles

for public-university spots and government

jobs, and they are prepared to protect their in-

terests. These Americans, many of them rela-

tively recent immigrants, believe in the coun-

try’s principle of equality under the law more

than millions who were born here.

The Seattle progressives who came close to

putting Referendum 88 over the top did get

their way in City Council elections. Amazon,

which is headquartered in the city, spent big to

elect candidates less hostile to business. Yet

most candidates backed by Amazon lost and

voters returned socialist Kshama Sawant to the

City Council.

The council may now have enough support

to reimpose a “head tax” on hiring that drove

Amazon’s advocacy in the election. Such a mea-

sure would discourage hiring and could shrink

the city’s tax base. Meantime, a cash-flush city

government would at least be barred from us-

ing the money on racial set-asides.

State voters reject racial

preferences, but Seattle

rebuffs Amazon.

Socialist Against Confiscation

B

ernie Sanders, believe it or not, is stand-
ing up for American property rights—at
least when it comes to guns. Asked at a
rally Sunday in Iowa whether
he supports “mandatory buy-
backs for AR-15s and AK-47s,”
Mr. Sanders didn’t equivocate
in the slightest.
“A mandatory buyback,”
he said, “is essentially confis-
cation, which I think is unconstitutional. It
means that I’m going to walk into your house
and take something whether you like it or not.
I don’t think that stands up to constitutional
scrutiny.”
Holy Charlton Heston! Who expected Mr.

Sanders to be a voice of moderation in the Dem-

ocratic primary? Give him credit for talking

honestly, instead of pandering. Extra points for

citing the Constitution, which

progressives often treat like a

scrap of dusty parchment.

If only Mr. Sanders will fol-

low this logic further. He

wants an 8% annual wealth tax

to make billionaires extinct.

Say it with us, Bernie: “An 8% annual wealth tax

is essentially confiscation, which I think is un-

constitutional. It means that I’m going to walk

into your house and take something whether

you like it or not.”

He’ll be a capitalist in no time.

Bernie Sanders says a

mandatory gun buyback

‘is unconstitutional.’

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