Table of Contents
Preface
Most bitcoiners I know want smaller government, lower taxes, and full control over their money. So far so good, but they’re also suspicious of anyone who talks about “the rich not paying their fair share”. In my view, the latter issue is manufactured and goes against their own interests.
There is no contradiction in being pro‑Bitcoin and pro‑wealth‑tax. In fact, Bitcoin makes wealth tax more efficient and easier to roll out.
Some Inequality is Fine
Let’s start with something obvious that often gets lost in the political shit show. Some inequality is healthy and natural, because, obviously, people are different. They make different choices, work on different thigs and take different risks.
As Emma Goldman wrote about her time in the early USSR, markets stayed mysteriously stacked with all kinds of scarce stuff which was unaffordable for many even when the state tried hard to abolish all private trade. Black markets and informal labor networks kept inequality alive. Real human societies are stubborn, and they generate inequality even under the most equality-obsessed systems.
The interesting question, then, is how much inequality a society can absorb before it starts breaking down.
Relative Wealth
Humans evaluate their situation in relative terms. Marx noticed this back in 1847 when he wrote that our wants and pleasures have their origin in society, and that we therefore measure them in relation to society, not in relation to the objects that serve for their gratification. Modern behavioral economists also tend to agree with this analysis.
In other words, you can give everyone more stuff, and a large fraction of the population will still feel poorer, as long as the people at the top got even more stuff.
This is why “rising tides lift all boats” is a bogus argument. Even when it’s true, it doesn’t defuse resentment. When wages rise but profits rise faster, the material position of the worker improves, but at the cost of his social position. That’s a direct quote from Marx, and it’s hard to argue with.
Why Inequality Becomes Destabilizing
People accept that their boss earns more, that some professions pay better than others, and that small business owners occasionally get rich. These are all legible forms of inequality. You can usually point to the work, risks taken, and the skill of an individual, and say “yeah, that’s fair”.
The problem starts when inequality becomes self‑reinforcing. When the rich get richer without doing anything, people stop believing that effort matters, and politics turns into a fight over who gets to loot the state.
History is full of examples where extreme inequality was the prelude to revolution or a war. A small extractive class captures politics. The majority is excluded from real wealth accumulation, leading to a full system failure.
A few of the more famous ones:
- Weimar Germany (1930s). Only industrialists were doing fine and the political vacuum was filled with extremism as a result.
- Russian Revolution (1917). A tiny noble class owned most of the land.
- French Revolution (1789). Aristocracy and clergy were exempt from taxes while peasants starved.
- Roman Republic (1st century BC). Latifundia concentrated farmland in the hands of a few senators, resulting in a century of civil wars.
The Real Problem Is Compounding
The driving force of wealth inequality is compounding. If you earn $100k a year and spend most of it, you stay roughly where you are. If you own $10M in stocks and bonds, you can do literally nothing, and your wealth grows by 7-10% per year on average.
The wealthy don’t need to work or contribute in any way, shape, or form. They can simply own, and the system rewards them for being idle. They’re not investors in any meaningful sense. They’re rentiers, parasites. They attach themselves to the productive economy and feed off its body.
Stocks and Bonds Are Extractive
Owning a broad index fund is, on balance, extractive. Modern public equity markets are dominated by mega‑caps that spend most of their free cash flow on buybacks and dividends.
A typical S&P 500 company today is a mature rent‑extraction machine. When you buy an index fund, you’re funding a portfolio of legalized monopolies that skim rent from the real economy.
The same logic applies to government bonds. As I noted in my review of The Road to Serfdom, even Hayek, an OG libertarian economist, treated government bonds as cancer. Bondholders are paid by taxpayers, present and future, who never consented to the obligation.
Buying government debt is essentially lending money to a state that has a monopoly on violence, and getting paid interest extracted from people who had no say in the contract. That’s a textbook definition of rent‑seeking, dressed up as “risk-free investment”.
Bitcoin Has No Yield
Bitcoin is not a “productive” asset. It has no political influence, it doesn’t pay dividends, it doesn’t compound or generate earnings. It’s completely optional and there’s no rent to extract. It won’t compete with you for housing and you don’t have to touch it if you don’t like it.
If you own Bitcoin, your wealth might grow only because other people want it more. That’s not guaranteed or risk-free, and the government doesn’t subsidize the demand as with real estate or guarantee steady dividend flow as with the bonds.
Compare this to the broader stock market, which over the last few decades has consistently grown faster than the underlying real economy. That gap is a direct measure of the extraction I’m talking about. Public companies get richer than the rest of the economy because an ever‑growing share of the real economy’s output is funneled to shareholders through captured markets.
The Wealth Tax Proposal
Wealth tax is not communism. The Netherlands, the OG of modern capitalism, has had a wealth tax in some form for over a century.
So why is “wealth tax” treated as a dirty word in Anglo‑American discourse? Mostly because the Anglo‑American elite has spent decades branding any redistribution as socialism, while quietly engineering the largest wealth transfer in human history to their own benefit. They’ve been very successful at it. Their talking points deeply infiltrated and infected society, but the side effects can’t be ignored forever.
Bitcoin and Wealth Tax Are Compatible
Bitcoiners should be the most enthusiastic supporters of a wealth tax, mainly because a wealth tax and Bitcoin form a self‑regulating system.
The rich who get into Bitcoin early will sit on a non‑productive asset that doesn’t compound and doesn’t give them political leverage. Their wealth becomes static and politically irrelevant. Meanwhile, the productive economy keeps running on real work and real risk.
Conclusion
Bitcoin is often framed as a tool of the capitalist elite, a way for the rich to opt out of taxation and the social contract. In reality, Bitcoin makes a wealth tax more enforceable by creating a natural exit ramp for people who refuse to participate, with zero social cost. There is no shame in doing that.
A wealth tax is not communist. It’s a tried‑and‑tested feature of stable market economies. Some inequality is fine and natural, but self-accelerating inequality is destabilizing, and the only way to defuse it without resorting to a social revolution is to tax accumulated wealth directly.
Bitcoin and wealth tax are complements. Bitcoin gives people a place to park their savings that doesn’t compound, doesn’t extract rent, and doesn’t influence politics. The wealth tax forces productive wealth to be shared. Together, they make a system that’s both more free and more stable than the one we have now.