BERKELEY, Calif – Economist Dr. Arthur B Laffer shredded the argument for California’s proposed billionaire wealth tax during a Young America’s Foundation Freedom at 250 Debate Series event at the University of California, Berkeley, sponsored by the Lynde and Harry Bradley Foundation, and organized by YAF’s Center for Entrepreneurship & Free Enterprise.
Laffer battled UC Berkeley economist Dr. Emmanuel Saez , who defended the tax in front of a standing room-only packed house.
The ballot initiative, expected to appear on the statewide ballot this November, would impose a one-time tax on billionaires’ assets in an effort to address state budget shortfalls. Saez was one of the key architects behind the proposal.
Throughout the debate, Laffer commanded the room with well-timed jokes and numbers-based assertions that the measure would punish investment and accelerate outmigration, while Saez made a moral argument, calling the tax a necessary response to rising inequality.
Saez based his defense on billionaires currently paying relatively little in taxes compared to the scale of their wealth growth, and Laffer agreed, but called for the removal of deductions, broadening the tax base, and other methods other than wealth taxes. Thoroughly, Saez framed the tax as a response to income inequality and budget pressures.
“You can’t tax a state into prosperity,” Lafffer argued during the debate.
In one of the biggest moments of the debate, Saez acknowledged the validity of Laffer’s other arguments, agreeing that he wasn’t certain the “one-time” tax would be temporary, and described the tax as “imperfect” and a “poor imitation” of a better tax system that he hoped for based on unrealized capital gains.
“The divergence of the billionaire class is perhaps the most extreme I’ve seen,” Saez said when discussing his motivations behind intervention.
Laffer focused his position on incentives as well, and against higher taxes that he says drive investors, businesses, and jobs out of the state. Laffer also argued that the tax targets California residents, rather than the actual wealth generated inside the state.
Later in the program, the audience also asked both speakers questions around the topic, and the conversation then expanded to California spending priorities, homelessness spending, and other projects of California.
Laffer used these questions to affirm that California has a problem spending funds efficiently, not a problem with money coming in.
“The problem with government is they do not bear the consequences of their own actions,” Laffer contended during the debate
The event drew a standing-room-only audience that reflected a broad cross section of the Berkeley community, notably including undergraduates, graduate and PhD students, faculty, and community members. In a poll before the event, data suggested attendees came from every angle of the debate, with many supporting and many against the proposal.
“The dream in America has never been to make the rich poor,” Laffer said near the end of his speaking time. “The dream has always been to make the poor richer.”
