Five Key Research Findings on Wealth Taxation for the Super Rich

Abstract

This essay summarizes five key findings from the author’s in-progress research evaluating the potential of wealth tax reform proposals for taxing the super rich. These five key findings are as follows:

-- First, the existing U.S. tax system does a very poor job of meaningfully taxing the super rich.

-- Second, there are only two approaches for reform that could plausibly succeed in making it so that the U.S. tax system would meaningfully tax the super rich: wealth taxation and mark-to-market taxation (sometimes known as “accrual” taxation).

-- Third, piecemeal reforms to the existing tax system that some have argued for as “progressive alternatives” to wealth tax reforms should be thought of as complements to wealth taxation rather than as competitors.

-- Fourth, much of the public criticism of wealth tax reform proposals ignores recent legal scholarship on valuation methodologies and other implementation design options, to the extent that this criticism mostly only applies to outdated, “straw man” versions of how a modern wealth tax might be implemented.

-- Fifth, concerns about the Supreme Court striking down wealth tax reforms as unconstitutional can be addressed by including fallback options in the wealth tax legislation.


This working paper is an early draft of a research project that is being developed into a series of co-authored articles.

--A draft of the first article in this series--Gamage, David and Brooks, John R., Tax Now or Tax Never: Political Optionality and the Case for Current-Assessment Tax Reform (2022). 100 North Carolina Law Review 487 (2022)--is available here: https://ssrn.com/abstract=3801164

--A draft of the second article in this series--Brooks, John R. and Gamage, David, TAXATION AND THE CONSTITUTION, RECONSIDERED (March 18, 2022). Tax Law Review, Forthcoming--is available here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4061257

--A draft of the third article in this series--Galle, Brian D. and Gamage, David and Shanske, Darien, Solving the Valuation Challenge: The ULTRA Method for Taxing Extreme Wealth (September 26, 2022). 72 Duke Law Journal 1257 (2023)--is available here: https://ssrn.com/abstract=4036716

Keywords: wealth tax, valuation

JEL Classification: K34