People do like free shit. This is why the wealthy like being wealthy. They get to live comfortable lives while their money earns them more money.
Your money doesn't earn you more money doing nothing. In a free market, you need to use it efficiently and in a way that provides value to other people. If you are careless or unlucky you will lose it.
To clarify, it's not free money.
And even if they were making decisions for themselves, the amount they earn is primarily based on the amount they have to invest, not the quality of their choices. Are the choices of someone who earns 1% on $1billion really 100x as valuable to society as someone who earns 10% on $1million?
If the wealthy make money by consumer surplus, then that money is honorably had and we want them to make more of it. They are doing well by doing good.
If the money is made by rent-seeking, then we should tax it.
Now all you have to do is figure out rent-seeking. :)
Rents are complicated to talk about, but the canonical example from Ricardo is land that is worth more because of where it is causing it to be more productive.
Take a parking lot in Manhattan - it'll be worth more and derive more income than the same area in Kansas farmland. The owner does nothing to add this value - the value is created by the other people and buildings surrounding this parking lot.
Since this value is socially created, it's more justifiable to tax it on behalf of that society.
Since our alternative is to tax labor, it seems more equitable to tax rents.
This might be a problem with say, Micheal Jordan, who trades on his name for income that's pretty clearly his but it's still income from rents - the desire of others to use his fame creates the value, not anything he does in particular.
Nobody said this has to be easy.
Why is realising that people are going to want cars in future more valuable than realising people are going to want parking in Manhattan in future?
EDIT: IMO the problem is that the rewards for creating capital are indefinite, and that this just becomes more noticeable when you're talking about housing.
Yes, there's a certain uncomfortable similarity to physiocracy.
Like I say, it's not a really easy thing to reason about. I can't really do it either past a rudimentary level. Your example "parking in Manhattan" is pretty good, but the car itself provides its own utility.
The utility for the parking lot is proved from others owning cars.
Likewise, gasoline provides its own utility. But oil underground? Probably rents.
Rents-thinking comes from Ricardo, but it's strongly associated with Henry George. Fascinating guy; "Poverty and Progress" is a worthy read.
The choice to produce cars seems analogous to the choice to buy land.
Once that choice is implemented, owning a factory (or share of a factory) seems no more and no less active nor noble than owning a piece of land.
One can then own land without actually doing anything with it - you can let it out at rates for others to use. You can't just let a car factory sit. And if you just own the building and land, and do nothing else, then yes- you're just charging rents. But generally owners have to work to own a factory, if at nothing else than making operation policy decisions.
Perhaps a trip thru "Poverty and Progress" is in order? George is better at this than I am.
What I'm talking about simply owning the factory (or perhaps a better example is owning a car company, without managing it yourself).
I'm familiar with Georgism, but I had a similar confusion about land value tax. I just don't see what's so special about land compared to capital goods. I'd rather have a general wealth tax.
I'd just like to see rents in general taxed rather than labor taxed. The theory of rents provides a means to distinguish between ... "socially useful" wealth and "sort of parasitic" wealth."
As you note, there's nothing original about this.
But in any case, I'm not suggesting a labour tax, I'm suggesting a wealth tax. I think my argument is similar to George's: just as LVT encourages efficient use of land, a wealth tax encourages efficient use of wealth in general.