The Economics of Taxing Net Wealth: A Survey of the Issues

Public Finance and Management 12(4) 2012

Posted: 28 Nov 2012

See all articles by Jan Schnellenbach

Jan Schnellenbach

BTU Cottbus-Senftenberg, Institute for Economics, Chair for Microeconomics; Walter Eucken Institute

Date Written: November 28, 2012

Abstract

This paper surveys possible motivations for having a net wealth tax. After giving a short overview over the state of wealth taxation in OECD countries, we discuss both popular arguments for such a tax, as well as economic arguments. It is argued that classical normative principles of taxation cannot give a sound justification for a net wealth tax. The efficiency-related arguments are also discussed and shown to be theoretically ambiguous, while empirical evidence hints at a negative effect on GDP growth. Finally, it is argued that despite of widespread and persistent lobbying for a revitalization of the net wealth tax, this is unlikely to happen due to political economy constraints.

Keywords: net wealth tax, inequality, redistribution, equity

JEL Classification: H24, D31, H23, H21, H22

Suggested Citation

Schnellenbach, Jan, The Economics of Taxing Net Wealth: A Survey of the Issues (November 28, 2012). Public Finance and Management 12(4) 2012. Available at SSRN: https://ssrn.com/abstract=2182271

Jan Schnellenbach (Contact Author)

BTU Cottbus-Senftenberg, Institute for Economics, Chair for Microeconomics ( email )

Erich-Weinert-Str. 1
Cottbus, 03046
Germany

HOME PAGE: http://www.b-tu.de/fg-vwl-mikro/team/prof-dr-jan-schnellenbach

Walter Eucken Institute ( email )

Goethestr. 10
Freiburg, 79100
Germany

HOME PAGE: http://www.eucken.de

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