4 Pages Posted: 11 Feb 2019 Last revised: 9 Feb 2021
Date Written: February 28, 2019
Targeted ultra-high net worth wealth taxes can fund reductions in taxes on wages. Wealth taxes are harder to avoid than existing capital gains taxes and inheritance taxes, and can be more precisely targeted toward extreme wealth. Exit taxes to prevent capital flight are consistent with business law principles governing partnerships. Valuation disputes can be managed through existing property tax mechanisms and through private law provisions called "shotgun clauses."
Most experts believe that wealth taxes are constitutional. The critical difference between wealth taxes and income taxes, the realization requirement, exists for administrative convenience, not as a constitutional requirement. Constitutional challenges can be discouraged by including in wealth tax legislation a savings clause that would create as a backup an economically equivalent income tax.
Part II: Taxes Spending and Innovation, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3335386
Part III: After paying ultra-high net worth wealth taxes, how much would billionaires have left to live on?, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3340925
Keywords: wealth tax, income tax, inequality, wages, tax wedge, capital gains, estate tax, inheritance tax
JEL Classification: H2, H24, H22, H23, H25, H26
Suggested Citation: Suggested Citation