Some quick thoughts on a wealth tax and Section 230 (thread)

Many progressives have recently become enamored with the idea of a wealth tax. There has not been anywhere near the same interest in repealing Section 230 of the Communications Decency Act.

This provision protects Facebook and other Internet intermediaries from the same rules on libel to which their competitors in print and broadcast are subject.

A wealth tax faces enormous political, legal, and practical obstacles.

The political obstacles are very evident. We would be lucky to get even half of the Democrats in either the House or Senate to support a wealth tax. Getting majorities in either chamber would be an enormous hurdle.

On the legal side, even if a wealth tax should be viewed as constitutional, as some legal scholars have argued. It is inconceivable that this Supreme Court would rule that it is constitutional.

We can talk about changing the court or maybe expanding it, but this means either a very long wait or a very big hurdle.

On the practical side, putting a whole new tax in place will inevitably have logistical problems.

Furthermore, there is a foolproof way for the rich to escape a wealth tax: leave the country. (They can leave before the tax is passed, making an exit tax moot.)

Turning to the repeal of Section 230, on the political side, we have a great ally in Donald Trump, who in one of his temper tantrums has decided he wants Section 230 repealed. We just need some Democrats to jump on board.

In terms legality, there is zero issue. Facebook has no constitutional right to get special protections that its competitors in traditional media do not enjoy.

On the practical side, taking away Facebook’s special protection is about as simple as it gets.

It just means that people libeled by material transmitted over Facebook would be able to sue just as they can over material printed in the NYT or broadcast over CNN. (The rules can adjusted for the Internet, just as they were with broadcast.)

In terms of reducing inequality, the day Section 230 was repealed Mark Zuckerberg’s fortune would likely be reduced by two-thirds or more. Many other very rich people would see a huge hit to their wealth.

For these people, the impact would be larger than decades worth of our wealth tax. We can tell similar stories about weakening patent and copyright protection and cracking down on Wall Street.

If we think about issues clearly, we can reduce both income and wealth inequality by changing the structure of the market. Tax and transfer policy is important, but it’s best not to structure the market to create gross inequality in the first place.