The “Robin Hood” Tax Campaign: Why Raiding the Rich Will Bankrupt America’s Future

 

Politicians promise painless cash from billionaires, but history screams otherwise—raid the rich today, wreck the economy tomorrow, and watch deficits grow teeth. In plain terms, taxing the rich won’t rescue America’s sinking budgets—it will choke growth, scare off innovators, and leave the middle class holding the bill when the Robin Hood fantasy collapses.

I have heard the pitch before. “Tax the rich. They can afford it.” It rolls off the tongue like a moral anthem. New York Mayor Zohran Mamdani wants a 2% levy on incomes above $1m. California’s Governor Gavin Newsom is flirting with a 5% “one-time” wealth tax on billionaires. In Europe, the drumbeat is louder. France debates wealth taxes. Britain’s left wing circles the same idea. The story is simple: budgets are bleeding, debts are rising, voters are exhausted after the inflation surge of the early 2020s, so let the top 1% foot the bill.

It sounds noble. It sounds fair. It sounds like Robin Hood. But I have learned something from history. Good intentions do not always make good economics. When politicians promise painless money, I check my wallet.

Let’s start with cold numbers. In the United States, the top 1% earn about 20% of national income and already pay nearly 33% of federal income taxes. That is not a rounding error. That is a third of the bill. The idea that high earners are lounging tax-free is mostly fantasy. America already runs one of the most progressive tax systems in the developed world. Since 1990, the government has offset much of the rise in pre-tax inequality through higher taxes on top earners and expanded spending, especially in health care. Redistribution has grown, not shrunk.

Yet politicians still say, “They can pay more.”

But there is a math problem no slogan can fix. There are simply not enough billionaires to fund a modern welfare state. California’s proposed wealth tax would raise about 2% of the state’s annual output. Mamdani’s proposal would bring in roughly 0.25% of output per year. That is loose change compared to pension obligations, Medicaid spending, defense budgets, and interest on debt. Even closing the notorious “step-up in basis” loophole on capital gains at death would likely raise less than 0.1% of GDP annually. That reform may be justified. It may be fair. But it will not rescue a broken budget.

You cannot fund a $6 trillion federal government by chasing a few hundred billionaires with a clipboard.

And then comes the second problem, the one politicians whisper about but rarely shout: economic damage. In New York, the top combined federal, state, and local tax rate already reaches 52%. Add another levy and what do you signal? That success is suspect. That risk is punishable. That innovation is a public utility.

Research backs this up. Studies show that a 1 percentage-point increase in income tax reduces the probability of filing a patent in the next 3 years by 0.6 percentage points. That may sound small, but innovation is fragile. Economists estimate that innovators capture only about 2% of the total value they create. Society captures the rest. So when you discourage entrepreneurial effort, you do not just hurt a millionaire. You shrink the pie for everyone.

Politicians wave this away. “Bankers will still show up.” Maybe. But growth is not built only on bankers. It is built on risk-takers who decide whether to launch a company in San Francisco or Singapore, whether to scale up in Austin or Dublin. Capital is mobile. Talent is mobile. Taxes are not.

Now let me talk about fairness, because that is the emotional engine of this crusade. Mamdani and Newsom lean hard on that word. Fairness. They frame wealth taxes as moral corrections. But fairness is not the same as envy. A fair system respects property rights. It is predictable. It allows people to reap the rewards of risk. If a wealth tax feels like an arbitrary seizure, trust erodes. Once trust erodes, capital flees quietly, then loudly.

History is my witness. Look at Russia after 1917. The Bolsheviks believed they were building a just society. Private property was abolished. Wealth was seized in the name of equality. What followed was economic collapse, forced collectivization, and famine. By the early 1930s, millions had died during the Holodomor in Ukraine. Central planning suffocated incentives. Innovation stalled. The Soviet Union eventually limped along for decades, but it never matched the productivity of market economies. It collapsed in 1991 under the weight of its own inefficiency. The road to that failure was paved with promises of fairness.

Before someone says, “We are not proposing communism,” I know that. But the lesson stands. When the state starts treating private wealth as a bottomless ATM, it drifts toward control, not growth. When you punish the farmer for growing more corn, do not be shocked when the harvest shrinks.

Now consider America’s own moral crusade: Prohibition. In 1920, the 18th Amendment banned alcohol. Reformers believed they were saving families, reducing crime, uplifting society. Instead, the policy created a black market worth billions in today’s dollars. Organized crime exploded. Al Capone built an empire in Chicago. Federal tax revenues from alcohol vanished during a period when the government still needed funds. By 1933, the 21st Amendment repealed Prohibition. The experiment failed because it ignored economic incentives. People wanted alcohol. Suppliers found ways to provide it. Good intentions collapsed under real-world behavior.

The Robin Hood tax campaign risks repeating that pattern. Politicians want easy money without asking the broad middle class to sacrifice. Voters, still scarred by inflation spikes in 2021 and 2022, resist broad-based taxes. So leaders reach for the least politically costly target: the rich. It feels painless. It polls well. But it is fiscally shallow and economically risky.

Europe shows the truth. Countries with large welfare states rely heavily on consumption taxes. Value-added taxes in nations like France and Germany hover around 20%. Everyone pays. That is how they fund generous benefits. America, by contrast, maintains a lower overall tax burden and a more progressive structure. If we want European-style spending, we would need European-style broad-based taxes. Pretending that billionaires alone can fund it is fantasy.

And there is a political cost. When only a small minority pays the bill, the majority loses incentive to question spending. Polls show voters rarely consider the economic side effects of tax hikes. If I believe someone else will pay, why restrain my appetite for new programs? But when everyone has skin in the game, debates become serious. Trade-offs become visible. Democracy becomes disciplined.

I can already hear the counterargument: “So do nothing?” No. Close loopholes. Simplify the code. Demand efficiency. Cut waste. But do not pretend that raiding the top 1% will erase decades of fiscal mismanagement. That is theater, not reform.

The Robin Hood model is seductive because it avoids hard conversations. It says we can spend more, tax only a few, and escape consequences. But economics is not a fairy tale. Budgets are arithmetic. Incentives matter. Growth matters. Trust matters. When Mamdani or Newsom promise that the levy is “one-time,” I raise an eyebrow. Governments rarely surrender new revenue streams. Once the door is open, it rarely closes. Today 5%. Tomorrow another “temporary” fix. I have seen this movie before. The sequel is never cheaper.

I am not defending greed. I am defending realism. If we want sustainable budgets, we must reform spending and broaden the tax base honestly. If we want growth, we must protect incentives. If we want fairness, we must define it carefully, not emotionally.

Robin Hood may win cheers in the village square. But in a modern economy, arrows do not balance books. They just pierce confidence. And once confidence bleeds out, no tax rate can revive it.

 

This article stands on its own, but some readers may also enjoy the titles in my “Brief Book Series”. Read it here on Google Play: Brief Book Series.