An important point here would the magnitude of those effects: how much a 1% wealth tax would reduce wealth creation? Whether it is by .0000001% or by 99%, it would be "incentives to create less wealth" but in the former case it is all but negligible and in the latter case it is a catastrophe.
Capital tax opponents seem to always use the elasticity of wealth creation with respect to the wealth tax rate is extremely high, but I do not remember seeing any evidence on this.
Of course. As I stated, it is a trade-off. I think the most important thing is that everyone is honest about this fact - nothing is free.
> My sense is that many people advocating for a wealth tax do not understand this conceptually.
or they do, and yet still advocate for it because they know they will never be affected by this tax, but the tax will benefit them (indirectly via more social welfare funded by said tax).
If you favor a wealth tax, you are implicitly arguing in favor of incentives to create less wealth. If you tax investment, there will be less investment. If you tax the rewards from great risk taking, there will be less great risk taking. So every tax is a trade-off: are we better off with less of the thing we're taxing and more in the hands of whomever is collecting the tax?
A related point would be that wealth can be created from nothing. It is not zero sum. My sense is that many people advocating for a wealth tax do not understand this conceptually.