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In this paper, we study the distributional effect of a progressive wealth tax. We show that there exists a threshold level below which raising the upper bound of the tax rate reduces inequality of wealth and consumption in the long run. Such a threshold increases when the difference between the rate of return on wealth and the growth rate, r − g , and the level of wealth inequality relative to that of labour income inequality rise. The room for raising the tax progressivity to reduce inequality is restricted if r − g falls and labour income inequality rises relatively to wealth inequality. more...

We study how a capital income tax and a wealth tax affect an investor's valuation of a company's stock in an efficient international capital market. Using a one-period model, a model of infinite horizon where the asset generates a future cash flow that is a martingale, and a finite horizon model where we abandon the martingale assumption, we find that a wealth tax and/or a capital income tax do not lead investors to value an investment differently from untaxed investors. Investors who seek a higher pre-tax rate of return due to capital taxes harm their own wealth. more...

In this paper, we review the existing empirical evidence on how individuals respond to the incentives created by a net wealth tax. Variation in the overall magnitude of behavioural responses is substantial: estimates of the elasticity of taxable wealth vary by a factor of 800. We explore three key reasons for this variation: tax design, context and methodology. We then discuss what is known about the importance of individual margins of response and how these interact with policy choices. Finally, we use our analysis to systematically narrow down and reconcile the range of elasticity estimates. We argue that a well-designed wealth tax would reduce the tax base by 7–17 per cent if levied at a tax rate of 1 per cent. more...

This paper investigates the feasibility of wealth taxation in developing countries. It uses rich administrative data from Colombia and leverages a government-designed program for voluntary disclosures of hidden wealth as well as the threat of detection triggered by the Panama Papers leak. There are two key findings. First, there is substantial (primarily offshore) evasion: two-fifths of the wealthiest 0.01 percent evade taxes, with these evaders concealing one-third of their wealth offshore. Second, strengthening enforcement can have a significant impact on wealth tax compliance, tax revenue, and progressivity. These results highlight both challenges and opportunities for wealth taxation in the developing world. (JEL D31, G51, H24, H26, K34, O15) more...

Previous theoretical and computational analyses demonstrate that uncorrelated variations in individual asset returns promote extreme inequality in financial wealth. This paper describes a standard individual-based computational model of this financial accumulation process and then extends it in order to expose other key influences on wealth inequality. We find large effects of individual behavior, cultural practices, tax policy, and technological change. Specifically, we present simulation experiments with heterogeneous saving rates, a stylized marriage institution, a wealth tax structured to mirror contemporary policy proposals, and variations in wage growth. These experiments demonstrate that modest concessions to realism have large effects on long-run wealth inequality in models of the financial accumulation process. more...

This article aims to analyze and understand the consequences of the wealth taxing and to this was raised information about the alien experience, as in Brazil such tax has not yet been regulated. In the current political and economic scenario of Brazil, characterized by considerable social crisis, this issue is being increasingly discussed and has been the subject of several studies seeking to find a solution to the problems through increased tax revenues. Considering the principle of ability to pay, it would be fair that large holders of fortunes, contributed more to the reduction of social inequalities, through taxation of their wealth and the subsequent redistribution of these incomes enabling the implementation of public policies. Through this analysis, we seek answers to the problem raised in the research project: the wealth tax would meet the principle of ability to pay? What reasons would prevent the regulation of tax in Brazil, which to date remains off the political agenda? Therefore, based on an exploratory research and the hypothetical-deductive method, the effort given in the work was to compare the principle of the ability to pay in light of the tax on fortunes. more...

In this article, we analyse the motives of collectors in the context of wealth management. Using 1185 questionnaires completed by persons liable to real estate wealth tax, we try to answer several questions: Who collects? Why do they collect? What do they collect? And how do they collect? We suggest several reasons: pleasure, potential for financial gain and friendly and family social relationships. Collectors make a clear distinction between their professional and private lives. Knowledge of these motives enables wealth managers to offer advice, wealth packages and products that are more in line with their clients' expectations. more...

We consider optimal taxation in a model with wealth-poor and wealth-rich households, where wealth derives from business capital and home ownership, and investigate the consequences of a rising wealth inequality at steady state on these tax rates. The optimal tax structure includes some taxation of labor, zero taxation of financial and business capital, a housing wealth tax on the wealth-rich households and a housing subsidy on the wealth-poor households. When wealth inequality increases, the optimal balance between labor and housing wealth taxes depends on the source of the increasing wealth. more...

This article analyses theoretical and practical implications of inheritance tax as the most debatable tax from legal and ethical viewpoints. Some countries have refused taxing inheritance. Others have applied inheritance taxation from national to local levels. The majority of developed countries tax wealth transfers. The primary purpose of inheritance taxation is the allocation of wealth within society and the mitigation of social inequality. Currently, Russia has neither an inheritance tax, nor any other wealth or wealth transfer taxes. This indicates an unfair tax system. The study is based on the analysis of the history of inheritance taxation in Russia and abroad, and the contemporary legal framework and practices in foreign countries. The authors highlight current advantages and disadvantages of inheritance taxation, the functions of the tax, and state considerations related to the potential design of inheritance tax in Russia. The main conclusion is that inheritance tax should be imposed in Russia as a social-oriented mechanism and levied on only the top-wealth societal cluster. more...

espanolRegularmente, cada nuevo gobierno asume con una reforma tributaria como parte de su programa, lo cual muchas veces tensiona el desarrollo social y politico del pais. La repetida modificacion de las reglas del juego introduce ruido en la economia, pues el vaiven legislativo genera una indeseable incerteza juridica y economica que no favorece las decisiones de inversion y ahorro. A partir de un largo analisis tanto academico —considerando la teoria y la evidencia empirica existente— como aplicado —considerando las mejores practicas internacionales—, este articulo propone repensar el sistema tributario como un todo y disena las bases de un modelo completamente nuevo. Este nuevo sistema tributario, que busca entre otras cosas ser lo mas neutral posible en terminos de las distorsiones que genera un impuesto, junto a otras politicas publicas adecuadas, podria incentivar la inversion y contribuir a alcanzar condiciones de equidad y desarrollo social. El sistema que se propone se basa en un impuesto a la renta y otro al consumo, como pilares centrales. El impuesto a la renta trata por igual el capital y el trabajo, igualando sus tasas e integrando completamente los impuestos corporativos con los impuestos personales finales. En el impuesto al consumo se propone modificar tanto la tasa como la base sobre la cual se aplica, reduciendo la primera y ampliando la segunda a actividades hoy exentas. El sistema se complementa con una profunda revision al modelo institucional tributario, incluyendo los aspectos jurisdiccionales del mismo, donde proponemos la creacion de un organismo autonomo del poder ejecutivo y con rango constitucional. Finalmente, a partir de datos y estudios academicos disponibles, estimamos la recaudacion tributaria de esta propuesta. Si bien estas estimaciones no son conclusivas y requieren de mayor analisis, predicen importantes holguras o superavits respecto de la recaudacion actual. EnglishIn general, each new administration begins its term with a new tax reform that was part of its campaign program, which might stress the country’s social and political development. The repeated changes of the rules of the game introduces uncertainty in the economy, which has a negative impact on investment and saving decisions. Based on an academic and practical analysis, which considered the theory of optimal taxation, the existing empirical evidence, and the best practices in developed countries, this work proposes a new tax system for Chile. This new tax system seeks to be as neutral as possible in terms of minimizing the distortions that taxes generate and, together with the proper public policies, it could incentive investment and contribute to reach conditions of social equity and development. The proposed system is based on an income tax and a tax on consumption as the main pillars, dismissing a wealth tax. Income tax levels the treatment between capital and work, equalizing their tax rates and fully integrating corporate taxes with personal final taxes. Regarding taxes on consumption, we propose an amendment to both the rate and basis over which they are applied, reducing the first, broadening the second, and covering certain activities that are currently exempted. The system is supplemented with a thorough review of the institutional tax model including its jurisdictional aspects, where we propose the creation of a fiscal authority that is autonomous from the Executive Power and with constitutional rank. Finally, based on available data and previous studies for Chile, we estimate the tax revenue arising from this proposed new tax system. Even though the estimated figures cannot be considered conclusive and require further analysis, they predict a significant surplus compared to the current tax revenue. more...

anemon Bu çalışmanın temel amacı gelir ve servet vergilerinin gelir dağılımı üzerindeki etkilerini Türkiye için 1987-2016 yıllarını kapsayan verileri kullanarak incelemektir. Ampirik analizler sonucu elde edilen bulgular şöyle sıralanabilir: i) modelde yer alan değişkenlerin durağanlık özellikleri I(1) ve I(0) olmak üzere farklılık göstermektedir ii) değişkenler arasında eşbütünleşme ilişkisi vardır iii) uzun dönemde transfer harcamalarında, gelir ve servet vergilerinde ortaya çıkan bir artış gelir dağılımı eşitsizliğini azaltmaktayken, işsizlik ve enflasyonda ortaya çıkan bir artış gelir dağılımı eşitsizliğini arttırmaktadır. Gelir dağılımı eşitsizliğini azaltmada servet vergisi de gelir vergisi kadar etkin olduğundan servet vergisinin kullanımı yaygınlaştırılmalıdır. The main aim of this study is to investigate the effects of income and wealth taxes on income distribution for Turkey by using data covering the years 1987-2016. The findings obtained as a result of the empirical analysis can be listed as follows: i) the variables in the model have mixed stationarity levels such as I(1) and I(0) ii) there is a long-run relationship between variables iii) in the long-run an increase in transfer expenditures, income, and wealth taxes reduces income inequality, while an increase in unemployment and inflation increases income inequality. Due to the wealth tax is as active as income tax in reducing income inequality, the use of wealth tax should be expanded. 851634 more...

Caused by the Covid crisis, the German federal government will accumulate new debt up to 452,2 bn. Euro for the years 2020 to 2022 according to current budget plans. Under the current fiscal rules (the German debt brake), this will lead to repayment obligations of a little less than 20 bn. Euro annually, starting on 2026. In the policy debate, this leads to calls for an abolition of the debt brake, for the revitalisation of the currently defunct net wealth tax, or the introduction of a one-off wealth duty. These proposals are discussed in this paper. It is argued that the debt brake should be kept intact as it is, and that the introduction of new levies on wealth would cause more harm than good. It is argued that the budgetary aftermath of the Covid crisis can be coped with by using the standard policy instruments. In particular, the crisis should trigger a discussion on spending priorities in German government budgets. more...

The purpose of the paper is to study current issues of wealth, which is due to current sustainable trends in wealth growth and increasing the number of wealthy individuals. The aim is to determine the essence, prerequisites for the emergence and development of wealth, as well as to reflect the historical aspects of the evolution of wealth and its current state. The topic of the article is caused by the need to reveal the modern social stratification of population by the level of wealth, the formation of a wealthy class of society and its growth, the processes of creating and increasing wealth. At the same time, the purpose of the article is to study wealth as an object of taxation. In this regard, an economical essence of the wealth tax and its introduction preconditions are considered, the specificity of functioning of wealth tax in a market economy, the most important features of wealth tax functioning are determined. Methodology. Proper analysis of the social structure of society in terms of material wealth allows to evaluate the efficiency of the economy and the quality of public policy in the system of creating and distributing public revenues, public goods and wealth. Fatal mistakes in choosing the state priorities of socio-economic policies and making the best decisions in the financial sphere appear without the results of these calculations. The survey is based on a comparison of data of wealth tax in different countries. Results. The question and the modern specifics of wealth are investigated. The value of wealth for society and the state is determined. The wealth tax is an effective fiscal tool of the state in the distribution of public revenues. The wealth tax exists in many countries in various forms. Practical implications. The possibilities of improving well-being and increasing wealth are explored. Adequate assessment of the level of well-being and wealth would enable the state to carry out a balanced and effective socio-economic and financial policy to stabilize society and adopt a stable public order. The financial essence of the wealth tax and its introduction preconditions are investigated. The specificity of functioning of wealth tax in a social market economy is considered. Value/originality. It has been found that wealth is a comprehensive, multi-faceted category, which can be characterized as a specific feature of the socio-economic structure of society, which determines its condition, results, dynamics and development tendencies. Wealth characterizes the ability to achieve a positive result (effect) in market conditions of managing and using the existing social and economic potential in the community, as evidenced by its level of civilization development. The peculiarities of the functioning of the wealth tax in different countries of the world are considered. The using of the wealth tax as a fiscal instrument in the state tax system is suggested. more...

The public and policy makers are showing a renewed interest in wealth taxes as a possible response to the problem of wealth inequality. This article describes the recent trend of rising wealth inequality, and the factors contributing to it, in developed countries, including Canada. The authors argue that an annual wealth tax could and should counter the trend, and that such a tax is both justifiable on economic grounds and technically feasible. They assert that the taxation of capital income does not adequately address the largely tax-free accumulation of large fortunes, and that an annual wealth tax is preferable to property taxes, which exclude the taxation of financial assets and are levied on gross rather than net wealth. The article responds in detail to major criticisms of an annual tax on wealth, arguing that such a tax is needed to achieve a more equal distribution of wealth while raising additional revenues. more...

Dünya’nın mali tarihine bakıldığında, ortaya çıkan olağanüstü dönemlerin siyasi, sosyal, ekonomik ve kültürel alanlar başta olmak üzere pek çok alan üzerinde olumlu veya olumsuz etkilerinin ve yansımalarının olduğu görülmektedir. Söz konusu olağanüstü dönemler deprem, sel, salgın, kasırga gibi doğal afetlerin neticesiyle oluşabilecekleri gibi ülkeler arasında yaşanan savaş ve çatışma hallerinin bir sonucu olarak da doğabilmektedirler. Kamu maliyesi açısından olağanüstü dönemlerin meydana getirmiş olduğu önemli sonuçlardan biri ülkelerin vergi sistemleri ve mevzuatlarında gerçekleşebilmektedir. Böylesine dönemlerden geçen veya bu dönemlerden etkilenen ülkelerde devletler; vatandaşlarından ek bir vergi almayı kendileri açısından meşru görebilmektedirler. Olağanüstü dönemlerin piyasaları yıkıcı ve bozucu etkilerini telafi edebilmek için devletlerin eliyle birtakım harcamaların yapılmasının gerekliliği muhakkaktır. Bu gerçeklikten hareketle devletler vergi sistemlerine ya yeni bir vergi ekleyerek ya da mevcut sistemde var olan vergilerin tabanını genişleterek, oranlarını veya miktarlarını arttırarak finansman açıklarını temin etmeye çalışabilmektedirler. II. Dünya Savaşı’nın devam ettiği olağanüstü dönemde, Türk mali tarihinde uygulanmış olan 1942 yılında getirilen “varlık vergisi” bu tür vergilerin bir örneğini oluşturmuştur. Bu çalışmanın amacı; Türk mali tarihinde önemli bir yere sahip olan “varlık vergisi”nin sosyo-ekonomik sonuçlarını ortaya koymak ve tartışmaktır. Bu amaca ulaşmak için nitel araştırma yöntemlerinden biri olan betimsel analiz ve doküman taraması tekniğinden yararlanılmıştır., When reviewing the financial history of the world, one can see that the extraordinary periods had positive or negative effects and reflections on many fields, particularly on political, social, economic and cultural fields. These extraordinary periods may occur because of natural disasters such as earthquakes, floods, epidemics, hurricanes as well as of war and conflicts between countries. One of the important results of extraordinary periods in terms of public finance is the changes in the tax systems and regulations of the countries. In countries that are experiencing such periods or that are being/have been affected by such periods, governments may find it legitimate to impose an additional tax on individuals in the community. It is obvious that governments have to make certain spending in order to compensate for the destructive and disruptive effects of extraordinary periods on markets. Based on this reality, governments can try to close their finance deficits by either adding a new tax to their tax systems or expanding the base, increasing the rates or amounts of the existing taxes in the current system. The "wealth tax" in Turkish public finance history, which was put into force in 1942 in the extraordinary period of World War II is an example of such taxes. The purpose of this study is to reveal and discuss the socio-economic consequences of the “wealth tax”, which has an important place in Turkish financial history. Descriptive analysis technique, which is one of the qualitative research methods, and document scanning technique were used. more...

Savaş ekonomisi savaş dönemlerinde ülkelerin uyguladığı ekonomi politikalarını bir bütün olarak anlatmak üzere kullanılan bir kavramdır. Savaş ekonomisi yaşayan ülkeler bu süreçte başta yüksek enflasyon olmak üzere üretim azalması, karaborsa, adaletsiz gelir dağılımı gibi sorunlarla uğraşmaktadır. Türkiye II. Dünya Savaşı’na katılmayarak tarafsız kalmıştır. Buna rağmen savaşa sürekli hazır olmak zorunda kaldığından savaş ekonomisi uygulamak durumunda kalmıştır. II. Dünya Savaşı sürecinde askeri harcamaların yükselmesi, ordunun ihtiyaçlarının giderilmesi, ithalatın daralması ekonomik yapıyı olumsuz etkilerken erkek işgücünün savaşa katılması sonucunda kadın ve çocuk emeği yetersiz kalmış ve üretim düşmüştür. Bu dönemde ek askeri harcamaların finansmanı, azalan üretim ve daralan ithalat sorunları, karaborsa, adaletsiz gelir dağılımı, enflasyon ve iaşe sorunları sorun teşkil etmiştir. Bu sorunlar neticesinde yeni vergiler konması ve mevcut vergilerin düzenlemesi düşünülmüştür. Bu kapsamda varlık vergisi, toprak mahsulleri vergisi ve ayni muamele vergisi getirilmiştir. Çalışmada savaş ekonomisi, II. Dünya Savaşı sürecinde Türkiye’de sosyoekonomik yapı ile savaş dönemindeki vergileme anlayışı üzerinde durulacaktır.Anahtar Kelimeler: Savaş Ekonomisi, Savaş, Vergi, Varlık Vergisi, Toprak Mahsulleri Vergisi.JEL Sınıflandırması: H12, H20, H50., War economics is a concept used to describe the economic policies of countries as a whole during the war periods. Countries with war economy are dealing with problems such as high inflation, production decline, black market, and unfair distribution of income. Turkey II. He did not participate in World War II and remained neutral. Despite this, he had to apply war economy because he had to be constantly ready for war. II. While the increase in military spending, the needs of the army and the contraction of imports negatively affected the economic structure during the World War II, as a result of the participation of the male workforce into the war, women's and children's labor was insufficient and production decreased. In this period, financing of additional military expenditures, decreasing production and contracting import problems, black market, unfair income distribution, inflation and food problems were problems. As a result of these problems, new taxes and regulation of existing taxes were considered. In this context, the property tax, land crop tax and in-kind tax were introduced. War economy in the study, II. World War II will focus on the process of taxation understanding of the socio-economic structure in Turkey during the war.Key Words: War Economy, War, Tax, Wealth Tax, Crop Tax.JEL Classification: H12, H20, H50. more...

Most taxes in the United States are levied on income flows, not capital stocks. One notable exception is state and local property taxes. This note documents their magnitude and regressivity. Proper... more...

"The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay" is a book about taxation and inequality in the United States. It contains some comparisons to other countries and is certainly relevant beyond the US. The book describes how US taxes became less and less progressive, up to the point where the richest of the rich pay a lower fraction of their income in taxes than the middle class. The authors propose a variety of measures to address this, including the introduction of a progressive wealth tax and of an effective minimum corporate income tax. more...

This survey discusses how capital should be taxed in advanced economies. We review the theoretical optimal tax literature, survey empirical studies on the distribution of capital and the distortion ... more...

O presente trabalho tem como objetivo a elaboração de uma análise acerca do Imposto sobre Grandes Fortunas, oriundo da França, analisando diversos aspectos como: suas origens, sua fundamentação, seus objetivos, as razões da não instituição em nosso país, os objetivos sociais, os prováveis pontos desfavoráveis e favoráveis ao imposto, além da comparação da situação brasileira com países que já instituíram o IGF. Trata-se de um trabalho baseado em metodologia exploratória e abordagem qualitativa, fazendo uso de procedimento bibliográfico. Ao final, conclui-se que o imposto sobre grandes fortunas é de difícil regulamentação, observado o sistema político-econômico brasileiro, no qual as propostas de implementação do imposto sofrem com a dualidade política brasileira, impedindo a análise justa que cabe ao imposto. more...

Outside of direct fiscal policy effects, the rise in inequality may be attributed to the demand for highly skilled labor rising more rapidly than its supply, as well as to reduced bargaining power by labor in the workplace. On fiscal policy, the US tax and benefit system is still progressive. The tradeoff between using tax hikes and higher benefits to reduce inequality vs. their negative effects on growth remains disputed. Very broad proposals such as Medicare for All and a Universal Basic Income are inefficient ways to address inequality, and the objectives of a wealth tax may be achieved through the existing income and estate tax systems. Broadening the tax base to move to more of a consumption-based system, and improving pre-K and K-12 education, are desirable policies. more...

The paper analyzes the fiscal effects of a Swiss-type tax on household wealth, with a $120,000 exemption and marginal tax rates running from 0.05 to 0.3 percent on $2.4 million or more of wealth. It also considers a wealth tax proposed by Senator Elizabeth Warren with a $50 million exemption, a 2 percent tax on wealth above that and a 1 percent surcharge on wealth above $1 billion. Based on the 2016 Survey of Consumer Finances, the Swiss tax would yield $189.3 billion and the Warren tax $303.4 billion. Only 0.07 percent of households would pay the Warren tax, compared to 44.3 percent for the Swiss tax. The Swiss tax would have a very small effect on income inequality, lowering the post-tax Gini coefficient by 0.004 Gini points. The effect of the Swiss tax and Warren tax on wealth inequality is miniscule, lowering the Gini coefficient by at most 0.0005 Gini points. more...

Hatay, Mondros Ateşkes Antlaşması ardından Fransızlar tarafından işgalinden tam 21 yıl sonra, Mustafa Kemal Atatürk’ün olağanüstü diplomatik gayretleri sonucu 11 Temmuz 1939 tarihinde tekrar anavatan sınırlarına dâhil edilmiştir. 1 Eylül 1939 tarihinde başlayan İkinci Dünya Savaşı’na aylar kala yaşanan bu gelişmenin sevinci, savaşın başlamasıyla bir nevi yarım kalmıştır. Savaş tüm dünyayı etkilediği gibi Türkiye’yi de hem askerî hem de ekonomik açıdan olumsuz etkilemiştir. Türkiye savaşa girmemiş olsa da bir buçuk milyona yakın genç silahaltına alınmıştır. Millî savunma masraflarının artması, genç nüfusun askerde olması bütçe açığını oluşturmuş, para basımı artmış, üretim düşmüş, fiyatlar ve enflasyon yükselmiştir. Bu gelişmeler halkı ekonomik yönden olumsuz etkilemiştir. Osmanlı Devleti’nden, Cumhuriyet’e miras kalan Müslüman nüfus genelde çiftçilikle uğraştığından Gayrimüslimler ticari piyasaya egemen olmuşlardır. Savaş esnasında yaşanan ekonomik sıkıntı halkın çoğunluğunu yoksullaştırırken bir takım tüccar geçinen vurguncuları ise aşırı zenginleştirmiştir. Bu dönemde ithalat işleri özellikle Gayrimüslimlerin elinde olduğundan kazananlar da yine bu tüccarlar olmuştur. Kazançlar karaborsacılık, stokçuluk ve vurgunculuk gibi yasa dışı yollarla elde edildiği için, vergiden de kaçırılmıştır. Bu yüzden devlet hazinesi gereken geliri sağlayamamış, kamu işlerinde güçsüz ve çaresiz kalınmıştır. İşte bu ekonomik kaostan çıkmak için 1942 yılında bir defaya mahsus olmak üzere Varlık Vergisi çıkarılmıştır. Aşırı kazanç sağlayanlardan alınmak üzere çıkarılan bu vergi, çiçeği burnunda bir il olan Hatay’da da uygulanmıştır. Bu vergi, uygulamaları esnasında ve sonrasında devlete karşı yurtiçinde ve dışında kara propaganda aracı olarak kullanılmıştır. Gayrimüslim nüfus bakımından hiçte azımsanamayacak bir il olan Hatay’daki Varlık Vergisi uygulamaları ise bu açıdan değerlendirildiğinde çok önemlidir. Fakat bugüne kadar bu konuda hiçbir çalışma yapılmamıştır. Bu çalışmada, Hatay’ın ilçeleri de dâhil olmak üzere vergi mükelleflerinin isimleri, vergi miktarları listeler hâlinde yerel gazete Yenigün’den faydalanılarak sunulmuştur. Çalışmamız, Varlık Vergisi uygulamalarına farklı bir kapı aralayarak, bu uygulamaların içeriğinin anlaşılmasına katkıda bulunacaktır. more...

We study attitudes towards the introduction of hypothetical new taxes to finance the cost of the COVID-19 pandemic. We rely on survey data collected in Luxembourg in 2020. The survey asks for the agreement of respondents over: a one-time net wealth tax, an inheritance tax, a temporary solidarity income tax, and a temporary increase in VAT. All questions include different and randomly assigned tax attributes (tax rates and exemption amounts). We find a clear divide with relatively high support for new wealth and inheritance taxes on the one hand and a low support for increases in VAT and income taxes on the other hand. While 58% of respondents agree or strongly agree with a one-time tax levied on net worth, only 24% are in favor of a small increase in VAT. Support for any tax is however negatively associated with the size of the tax as measured by the predicted revenues. Our results indicate that a one-time wealth tax could raise substantial revenues and still garner public support.The online version contains supplementary material available at 10.1007/s10797-022-09744-y. more...

How does wealth taxation differ from capital income taxation? When the return on investment is equal across individuals, a well-known result is that the two tax systems are equivalent. Motivated by recent empirical evidence documenting persistent return heterogeneity, we revisit this question. With heterogeneity, the two tax systems typically have opposite implications for both efficiency and inequality. Under capital income taxation, entrepreneurs who are more productive and therefore generate more income pay higher taxes. Under wealth taxation, entrepreneurs who have similar wealth levels pay similar taxes regardless of their productivity, which expands the tax base, shifts the tax burden toward unproductive entrepreneurs, and raises the savings rate of productive ones. This reallocation increases aggregate productivity and output. In the simulated model parameterized to match the US data, replacing the capital income tax with a wealth tax in a revenue-neutral fashion delivers a significantly higher average welfare. Turning to optimal taxation, the optimal wealth tax (OWT) is positive and yields large welfare gains by raising efficiency and lowering inequality. In contrast, the optimal capital income tax (OKIT) is negative—a subsidy—and delivers lower welfare gains than OWT, owing to the welfare losses from higher inequality. Furthermore, when the transition path is considered, the gains from OKIT turn into significant welfare losses for existing cohorts, whereas OWT continues to deliver robust welfare gains. These results suggest that moderate wealth taxation may be a more appealing alternative than capital income taxation, which can be significantly more distorting under return heterogeneity than under the equal-returns assumption. more...

An annual wealth tax, a mark-to-market income tax, and a retrospective capital gains tax are three approaches to capital taxation that yield roughly equivalent outcomes under certain conditions. Th... more...

Using administrative wealth records from Denmark, we study the effects of wealth taxes on wealth accumulation. Denmark used to impose one of the world’s highest marginal tax rates on wealth, but this tax was greatly reduced starting in 1989 and later abolished. Due to the specific design of the wealth tax, the 1989 reform provides a compelling quasi-experiment for understanding behavioral responses among the wealthiest segments of the population. We find clear reduced-form effects of wealth taxes in the short and medium run, with larger effects on the very wealthy than on the moderately wealthy. We develop a simple lifecycle model with utility of residual wealth (bequests) allowing us to interpret the evidence in terms of structural primitives. We calibrate the model to the quasi-experimental moments and simulate the model forward to estimate the long-run effect of wealth taxes on wealth accumulation. Our simulations show that the long-run elasticity of taxable wealth with respect to the net-of-tax return is sizeable at the top of distribution. Using administrative wealth records from Denmark, we study the effects of wealth taxes on wealth accumulation. Denmark used to impose one of the world's highest marginal tax rates on wealth, but this tax was greatly reduced starting in 1989 and later abolished. Due to the specific design of the wealth tax, the 1989 reform provides a compelling quasi-experiment for understanding behavioral responses among the wealthiest segments of the population. We find clear reduced-form effects of wealth taxes in the short and medium run, with larger effects on the very wealthy than on the moderately wealthy. We develop a simple life cycle model with utility of residual wealth (bequests) allowing us to interpret the evidence in terms of structural primitives. We calibrate the model to the quasi-experimental moments and simulate the model forward to estimate the long-run effect of wealth taxes on wealth accumulation. Our simulations show that the long-run elasticity of taxable wealth with respect to the net-of-tax return is sizable at the top of the distribution. more...

This chapter investigates whether the replication of inequality is, other things being equal, morally objectionable in ways not applicable to inequality that remains confined to a single generation or “birth cohort.” The focus is both theoretical and practical. The chapter considers the philosophical foundations that might lie behind an objection to dynastic inequality, negotiating the diversity of egalitarian views supporting this position and the complexity around the causal mechanisms at work in cases where inequality has a dynastic tendency. It then discusses the policy reforms that might target inequalities that replicate old distributive trends while leaving newly produced trends more intact, with a focus on tax policy. Current tax rules in most developed economies do not make a distinction between new and old influences on the material distribution. Accordingly, it is likely that the tax reforms implied could be quite extensive. more...

There is growing debate, both social and academic, about the possibility of levying an annual net wealth tax. Until a few years ago, such a proposal appeared difficult to both implement and control, but recent technological innovations, which could greatly facilitate the periodic valuation of wealth, combined with improvements in international tax information sharing could make a “modern wealth tax” possible. Nonetheless, a number of challenges regarding its design still need to be addressed. Taking advantage of the Spanish experience—the only EU country to levy a wealth tax—we undertake a quantitative analysis of various key legal elements of the current tax (exemptions and the common income and wealth tax ceiling) by means of a tax simulator we have developed; we also analyze its redistributive power. Our results show that the family business exemption and the common ceilings are highly regressive. We also assess the effectiveness of alternative reforms with more comprehensive tax bases (JEL codes: H24, H23, and D31). more...

This paper reviews the historical trends of the distribution of income and wealth in the United States. It also discusses the literature on whether imposing wealth tax suggested by Senator Warren and Sanders will improve the inequalities. The paper researches the tax policy regarding the Wealth taxes on ultra-wealthy households, the policy that has been proposed by Democratic presidential candidates to fight against inequality and raise extra revenue in the long term. more...

This chapter relates Christian beliefs to interest and the modern banking system, and discusses how ethical approaches to interest have developed over time. After seven ‘snapshots’ of attitudes to charging interest, from ancient Greece and Rome up to the present day, it outlines five beliefs shared by Christians which have correlates in the field of economics and society. It then examines the question of interest today, the modern banking system and arguments for and against using interest as part of it. It concludes that there are some good moral and practical reasons for a non-interest banking system, but it cannot easily co-exist with a conventional banking system. Christians are more concerned with the spirit and purpose, than with the letter of any law. If there are good arguments for interest-free banking, they will want to pursue them, but they will not postpone finding other ways to help the poor when one particular way may be unavailable. more...

America does not redistribute wealth from its richest citizens. This Article sketches out the conflict between revenue-raising and redistribution that has shaped American tax policy and practice for at least a century and resulted in the sacrifice of redistributive taxes on the altar of the state’s revenue-raising needs. In theory and in practice, the tax system is not a direct generator of redistribution but rather serves as the efficient means to redistributive acts left offstage. Flattened wage taxes emerge as the main source of revenue. The wealthiest pay no tax. This Article examines the tension between the two masters of tax, revenue-raising and redistribution; illustrates with a case study of Senator Bernie Sanders’ wealth tax proposal; and concludes with hopes for using tax systems to better serve redistributive ends, in both theory and practice. The most important step is the articulation of clear and discrete redistributive goals, in addition to and independent of the specific goal of getting resources to the poor. more...

Rashba’s responsum III:406 relates to a dispute between the Saragossa Jewish community and taxpayer Reuven, whose daughter married an out-towner within the city but then subsequently emigrated without paying the exit tax. The community, which had enacted an ordinance to tax dowries of offspring who exit the city, sought to recover an exit tax. The taxpayer (Reuven) argued that the technical language of the ordinance applied only if the wedding took place outside of the city and exempts weddings that took place in the city even if the newlyweds later departed. We derive three lessons on tax ethics and policy from the Rashba’s responsum. First, the tax code should be applied based on its spirit, as determined by the application of precedence, not by an exact technical reading of its language. Second, a taxpayer is blameless for taking advantage of a valid loophole, even if the application of the loophole does not conform with the intent of the tax code. Third, a taxpayer is blameless when another party to a transaction engages in inappropriate tax evasion. This is the case even if the structure of the transaction contributed to the evasion. We show that similar conclusions were reached by U.S. Judge Learned Hand seven centuries after the Rashba. more...

The Constitution requires that “direct taxes” be “apportioned”—that is, that the revenues collected from each State be in proportion to population. Based on this obscure provision, prior scholarship has debated whether unapportioned wealth tax or related accrual-income tax reforms should generally be held constitutional, unconstitutional, or whether specific proposals should be held constitutional and others unconstitutional. This Article takes a different approach. Recognizing the real uncertainty about how the Supreme Court might ultimately decide, this Article explains how Congress can draft a reform to navigate through that uncertainty. Specifically, this Article explains how Congress can draft a wealth tax or accrual-income tax reform that should survive constitutional scrutiny regardless of how the Supreme Court might ultimately rule on the disputed constitutional questions. To that end, this Article argues that the long line of cases on direct and indirect taxes, combined with the 16th Amendment, synthesize into what we label as the “Indirect Tax Canon.” This Article further argues that courts following that Canon should uphold properly constructed wealth tax or accrual-income tax reforms structured as indirect taxes—without requiring apportionment. Yet this Article then additionally explains how Congress can bolster such reform proposals by drafting fallback provisions to easily transform these reforms into apportioned taxes, fairly and practically, in the event of the Court ruling that apportionment is required. Any interstate inequities from this can be remedied through a fiscal equalization program that would rebate excess revenues to poorer states. As a result, with careful drafting, the constitutional risks for a wealth tax or related accrual-income tax reform should be minimal. more...

Does parental wealth inequality impact next generation labor income inequality? And does a tax on parental wealth affect the labor income distribution of the next generation? We tackle both questions empirically using detailed intergenerational data from Norway, focusing on effects on wages rather than capital income. Results suggest that a net wealth of NOK 1 million increases wages of the children by NOK 14,000. Children of wealthy parents also have a higher labor income mobility. The estimated hypothetical wage distribution without the wealth tax is more unequal. Moreover, suggestive evidence indicates parental wealth is associated with higher labor risk taking. more...

India’s individual or personal income tax has become complex over the years. It comprises various elements and branches thereof including the taxation of payroll or salaries, interest, dividends and capital gains, estate and wealth tax, inheritance and gifts. Some have been repealed. Several of them are linked to other taxes. For example, the tax on dividends has been linked to a tax on securities transactions, the wealth tax was linked to a minimum tax, though at present the wealth tax stands abolished. There also were components of presumptive tax on agricultural holdings several of which have not survived. Thus, many income-oriented taxes have been experimented with over the decades since the Income-tax Act was introduced in 1961 and implemented from 1962. Several of those experiments did not last, for example, attempts to tax fringe benefits through a tax specifically on them, and a tax on bank transactions to control the black economy had to be repealed reflecting popular demand. In the 2000s, several attempts to reform the income tax into a consolidated direct tax code have not succeeded, more often than not due to the inaction of successive governments. The hope for reform survives, however, in the present day. more...

This white paper report provides Revenue, Economic, and Constitutional Analysis of the proposed California Tax on Extreme Wealth (ACA 8 & AB 310) and also a Plain-English Summary Outline of its major provisions. more...

An inquiry into the innate nature of a tax presupposes examination of an intricate web of variables, which on most occasions results into raging debates. For examples, whether a tax on service provider is a tax on service or a professional tax, whether a tax on capital value of assets is same as wealth tax, whether a tax on tobacco is luxury tax, nature of expenditure tax, etc. are some intriguing controversies into the true nature of various taxes which have received exposition of the Supreme Court. In such cases, the complexities often issues when the characteristics of the tax legislation depart from the ordinarily understood dimensions of a particular tax. The immediate case at hand is of ‘tax on distributed dividend’, or Dividend Distribution Tax (‘DDT’), as it is popularly called which is imposed under a separate Chapter of the Income Tax Act, 1961 (‘ITA’). This tax was introduced in 2000, omitted and reintroduced after a brief hiatus. DDT has since then been in vogue upto March 2020 when its levy was discontinued. Its contours have been examined twice by the Supreme Court, yet the debate on its true nature continues. The exact issue for consideration is whether DDT is a tax on income of the shareholder, which has resulted into extensive debates, particularly in the context of international tax. The inquiry arises from the challenges by taxpayers to the official view of the Government that DDT is not a tax on the income of the shareholder. According to the shareholders, particularly those who are Non-Residents and entitled to invoke Double Taxation Avoidance Agreements (DTAA), DDT is nothing but a tax on income of shareholder and therefore the levy of DDT should also observe the limitations under the DTAA on any tax on dividend in India. The debate is ongoing and has received mixed response. Currently, the issue awaits consideration of the Income Tax Appellate Tribunal. This article seeks to demystify the cause of controversy and the run-up to the present status. more...

The individual capacity to form personal preferences constitutes an essential element of the democratic process. At the same time, policies with far-reaching consequences often require profound expertise. Taxation is such an example. Due to its complex character, bounded rationality might induce biases causing other outcomes than intended. This paper quantifies shifts in stated preferences for wealth taxation caused by misperceived burden consequences of commonly politically discussed tax parameters: tax allowances and tax rates. For this, we conducted a randomized survey experiment with over 1,200 respondents in Germany. In a 2 by 2 design, our respondents were randomly selected to indicate both their preferred tax allowance and tax rate for either a yearly or a one-time wealth tax. Our treatment group was provided with easy-to-understand information on the resulting effective lifetime tax burden for the re-spective instrument. We find the preferred effective tax rate to drop by almost 15 percentage points for a yearly wealth tax if our participants are fully informed, whereas we do not find this effect for the one-time wealth tax. In terms of informed preferences our respondents prefer the yearly wealth tax over a one time wealth tax if misperceptions are resolved: the preferred effective tax burden of a yearly wealth tax is about 25 percentage points higher (40.0% vs. 15.2%). While not being able to fully explain the source of this difference, we argue that both the total burden as well as the reasonability of single payments might be factors that form preferences for tax parameters. more...

El estudio analiza la adecuación a los principios de justicia tributaria de las exenciones a favor de los patrimonios empresariales contenidas en el Impuesto sobre el Patrimonio. Por una parte, el autor pone de manifiesto las posibles vulneraciones del principio de igualdad que se pueden detectar en la aplicación de la exención de los bienes y derechos afectos a las actividades económicas contenida en el artículo 4.8. Uno de la LIP, derivadas principalmente de la incongruente configuración del requisito relativo a la principal fuente de renta del contribuyente. Además, la ausencia de una cuantía máxima de los bienes exentos pone en entredicho tanto la finalidad declarada de la exención como su adecuación al principio de progresividad. Por otra parte, el autor demuestra como la configuración actual de la exención de determinadas participaciones en entidades, contenida en el artículo 4.8.Dos de la LIP, está muy alejada de ser una exención «análoga» a la anterior y, con ello, contradice abiertamente la finalidad para la que fue creada. Además, la flexibilización de los requisitos para su aplicación ha permitido extenderla paulatinamente a los contribuyentes que más riqueza poseen, de forma que actualmente no respeta, en opinión del autor, los principios de igualdad y progresividad predicables del sistema tributario español, máxime cuando además está estrechamente vinculada al disfrute de las reducciones de base imponible previstas en el Impuesto sobre Sucesiones y Donaciones a favor de los patrimonios empresariales. The study analyses the adequacy to the tax justice principles of the exemptions in favour of business assets contained in the Wealth Tax. On the one hand, the author highlights the possible violations of the principle of equality because of the application of the exemption of property and rights attached to economic activities contained in article 4(8)(1) of the LIP, derived mainly from the incongruous configuration of the requirement related to the main source of taxpayer’s income. Furthermore, the absence of a maximum amount of the exempt assets is debatable in the light of the stated purpose of the exemption and its adequacy to the principle of progressivity. On the other hand, the author demonstrates how the current configuration of the exemption of certain participations in entities, regulated in article 4(8)(2) of the LIP, is far from being an exemption «analogous» to the previous one and, in consequence, clearly contradicts the purpose for which it was created. In addition, the flexibility of the requirements for its application has allowed it to be gradually extended to the wealthier taxpayers. Thus, the author considers that it does not currently respect the principles of equality and progressivity of the Spanish tax system, especially when it is also closely linked to the enjoyment of the tax base reductions granted in the Inheritance and Gift Tax for business assets. more...

We study the response of saving decisions to two alternative capital taxation, i.e., wealth tax and capital income tax. We conduct an online “life-cycle” experiment on Amazon Mturk, where subjects make dynamic saving decisions. Subjects exhibit an overreaction to the wealth tax, not to the capital income tax: the subject saves significantly less with the introduction of wealth tax than with a financially equivalent drop in capital return. Furthermore, we build a parsimonious behavioral model of individual optimization to characterize the overreaction. Finally, to quantitatively illustrate the policy implication of overreaction for optimal capital taxation analysis, we use the same model and calibration as the seminal study of Conesa et al. (2009), but modified it to allow for behavioral overreaction. The results show that a larger overreaction bias generates more welfare loss for the economy. The optimal capital tax rate decreases as households overreact more to capital taxation. more...