Accretion-Based Progressive Wealth Taxation

39 Pages Posted: 21 Aug 2016 Last revised: 20 Mar 2017

See all articles by David Hasen

David Hasen

University of Florida Levin College of Law

Date Written: August 17, 2016


A large literature has compared the efficiency properties of income and consumption tax bases. Its general conclusion is that a consumption base dominates an income base, except to the extent that practical compliance and administrative problems create opportunities for avoidance and evasion under a consumption tax that are absent under an income tax. An apparent corollary is that the same superiority holds in the comparison of an ideal accretion wealth tax and an ideal consumption tax, because an accretion wealth tax seems not to differ in relevant ways from an ideal income tax.

This paper argues that these conclusions are qualified. A progressive accretion wealth tax can curb negative externalities that remain in place under a consumption or an income tax, and it can do so more effectively than an excise wealth tax; the paper accordingly argues for an accretion tax as a supplement to existing federal taxes (or to a consumption tax, if enacted). The paper also argues that any practicable consumption tax creates timing distortions absent under an accretion-type tax (whether on income or on wealth), because of the need for progressivity in rates. Policy makers need to consider all of these issues when weighing the relative merits of income, consumption and wealth taxes.

Keywords: Taxation, Wealth Taxation, Public Finance

JEL Classification: H2, H23, H24, K34

Suggested Citation

Hasen, David, Accretion-Based Progressive Wealth Taxation (August 17, 2016). Florida Tax Review, Forthcoming, Available at SSRN: or

David Hasen (Contact Author)

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

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