Democracy, Taxes, and Wealth
50 Pages Posted: 9 Jun 2004
This article demonstrates why wealth concentration matters and why the tax system should be used to help control wealth concentration. It shows that wealth concentration appears to be related to slow economic growth because of the lack of opportunities. It also shows that wealth concentration adversely affects the democratic process. It argues that because inheritances represent approximately fifty percent of wealth, wealth transfers should be taxed so long as the tax provides benefits that outweigh any assoiated harms. Using the current estate tax as a case study, the article concludes that a wealth transfer tax raises significant revenues and helps curb upward spiralling wealth concentration. Moreover, contrary to what has commonly been asserted, empirical studies generally show that the tax does not discourage savings.
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