Wealth taxation (annual or one-time)

Statement

An annual or periodic tax on net wealth above a high threshold — at rates calibrated to be below the long-run real return on capital — directly addresses the r > g compounding channel by reducing the after-tax return to capital for the largest holders. Implementation requires solving valuation (for illiquid assets) and avoiding flight (via global coordination), but where adopted credibly it constrains wealth-share growth.

Provenance

Sources

• Saez & Zucman — Progressive Wealth Taxation
  paper · 2019 · Saez, Zucman
  https://www.brookings.edu/articles/progressive-wealth-taxation/
  Argument and design proposal for a top-bracket annual wealth tax, with revenue and behavioral-response estimates calibrated to US distributional accounts.
• OECD — The Role and Design of Net Wealth Taxes
  report · 2018
  https://www.oecd.org/tax/the-role-and-design-of-net-wealth-taxes-in-the-oecd-9789264290303-en.htm
  Cross-country review of net-wealth-tax experience: a well-designed wealth tax can raise material revenue but is administratively demanding, particularly around valuation.

Causal links