Progressives and Conservatives Are Incorrect About Taxing the Wealthy

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Progressives and Conservatives Are Wrong About Taxing the Rich

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Summary

Connor O’Keeffe argues the recent progressive push to tax the rich, spearheaded by Governor Kathy Hochul’s proposed New York City tax on second homes over $5 million, Mayor Zohran Mamdani’s viral video claiming it would raise $500 million for childcare and cleaner streets, and AOC’s podcast claim that “you can’t earn a billion dollars,” fundamentally misdiagnoses the problem by treating the federal government as a starved benevolent institution rather than the corrupt expropriation engine it actually is. He cites Murray Rothbard’s framework from Man, Economy, and State that interventionism shifts the path to wealth from serving consumers toward “wielding coercion or winning favors from wielders of coercion,” demonstrated by top weapons companies making $2 trillion in revenue on $1 billion in lobbying during the first two decades of the war on terror (an 1,800% ROI), and politically active corporations averaging $760 returned for every $1 spent on political influence. He concludes that raising taxes on the rich would hurt the genuinely productive mid-level entrepreneurs while leaving the politically connected net-tax-consumer class untouched, making the underlying problem worse rather than solving it.

 

Top 5 Key Topics

• The Mamdani-Hochul-AOC tax push and its viral framing: Hochul’s proposed tax on second homes over $5 million in NYC got little attention until Mamdani filmed a well-produced video in front of a billionaire’s nine-figure penthouse claiming it would “quickly raise $500 million” for free childcare, cleaner streets, and safer neighborhoods. The city’s comptroller estimated the actual revenue would be a few hundred million lower, and AOC then nationalized the discussion by claiming billionaire wealth comes only from market power, rule-breaking, rent-seeking, and wage theft.

 

• The war-on-terror lobbying ROI: Top weapons companies invested just over $1 billion in lobbying during the first two decades of the war on terror and generated over $2 trillion in revenue, an 1,800% return on political investment. Across all industries, the most politically active corporations averaged $760 in returns for every dollar spent on political influence, illustrating why entrepreneurs increasingly abandon genuine value creation for political rent extraction.

 

• Rothbard’s framework of incentive distortion: As government becomes a larger economic player, entrepreneurs face overwhelming incentives to abandon actual production and join those using government to expropriate wealth from a shrinking productive sector because the potential gains are so much higher. The economy already has entire industries that are decoupled from consumer wants and “actively involved in attaining wealth either directly or indirectly through force,” which O’Keeffe calls the lived reality rather than a hypothetical future danger.

 

• The federal spending versus billionaire net worth comparison: The federal government already spends roughly the equivalent of the entire combined net worth of every billionaire in the country every single year, making the progressive claim that a bit more taxation would eliminate poverty preposterous. The income tax is cited as the classic example of how taxes initially sold as applying only to the ultra-wealthy expand to apply to nearly everyone, with recurring wealth taxes positioned as the likely next iteration of the same pattern.

 

• Which “rich” actually get hit: The politically connected wealthy in finance, tech, and other heavily subsidized industries are net tax consumers who benefit from more government taxing and spending, while the productive class that actually gets hurt by tax hikes consists of “mostly faceless mid-level entrepreneurs kickstarting lines of production that consumers rarely even think about but benefit substantially from.” Seizing more of their income dissuades the next round of value-creating entrepreneurs while making the lucrative political-expropriation path even more attractive.