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A Comprehensive Wealth Tax


David J. Shakow


University of Pennsylvania Law School; Chamberlain Hrdlicka

Reed Shuldiner


University of Pennsylvania Law School

September 1998

University of Pennsylvania Law School, Institute for Law and Economics, Working Paper No. 266

Abstract:     
Income, consumption, and wealth are all possible bases for a tax system in the United States. Scholars have specified the structure of income tax and consumption taxes, but no one has attempted to describe in detail a comprehensive wealth tax for the United States. In this paper, we begin to develop such a structure. In particular, we hypothesize that the combination of a flat rate tax on networth and a flat rate tax on earned income along with an appropriate level of exemptions, could be an attractive tax base.

In order to explore the structure of a wealth tax, we first specify the base of the tax. Using the Federal Reserve Board?s Survey of Consumer Finances we then estimate the tax rates that would be needed to raise the same revenue as currently raised by the personal and corporate income tax. We find that rates of 1.57% on net worth and 17.7% on earned income would be required. We also explore the rates that would be required under alternative specifications of the base.

Once we have specified the base and the rates, using the SCF data we are then able to explore the distribution of the tax by income class. We compare the distribution to the distribution of the current Federal income tax. We find that the wealth tax we describe is able to achieve the same level of progressivity over much of the income range.

Number of Pages in PDF File: 59

JEL Classification: H21

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Date posted: August 13, 1999  

Suggested Citation

Shakow, David J. and Shuldiner, Reed, A Comprehensive Wealth Tax (September 1998). University of Pennsylvania Law School, Institute for Law and Economics, Working Paper No. 266. Available at SSRN: http://ssrn.com/abstract=169728 or http://dx.doi.org/10.2139/ssrn.169728

Contact Information

David J. Shakow (Contact Author)
University of Pennsylvania Law School ( email )
3501 Sansom Street
Philadelphia, PA 19104
United States
Chamberlain Hrdlicka ( email )
300 Conshohocken State Rd
West Conshohocken, PA 19428
United States
Reed Shuldiner
University of Pennsylvania Law School ( email )
3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-6536 (Phone)
215-573-2025 (Fax)
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