Taxing Our Wealth
This paper evaluates proposals for an annual wealth tax. While a dozen OECD countries levied wealth taxes in the recent past, now only three retain them, with only Switzerland raising a comparable fraction of revenue as recent proposals for a US wealth tax. Studies of these taxes sometimes, but not always, find a substantial behavioral response, including of saving, portfolio change, avoidance, and evasion, and the impact depends crucially on design features, especially the broadness of the base and enforcement provisions. Because the US proposals are very different from any previous wealth tax, experience in other countries offers only broad lessons, but we can gain insights from closely related taxes, such as the property and the estate tax, and from optimal tax analysis of the role of wealth taxation.
We are grateful to Alan Auerbach, Marius Bruelhart, Leonard Burman, Reto Foellmi, Gordon Hanson, Janet Holtzblatt, Bas Jacobs, Louis Kaplow, Beth Kaufmann, Paul Kindsgrab, Matthias Krapf, Greg Leiserson, Isabel Martinez, Enrico Moretti, Raphael Parchet, Sarah Perret, Dina Pomeranz, Anasuya Raj, Casey Rothschild, Kurt Schmidheiny, Kent Smetters, Timothy Taylor, Uwe Thuemmel, Daniel Waldenstrom, Ivan Werning, Heidi Williams and Gabriel Zucman for valuable comments and to Paul R. Organ and Gabriele Patete for exceptional research assistance. Florian Scheuer acknowledges support through ERC grant No. 757721. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.