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Subject

Wealth taxation.

Significance

Income and wealth distributions across the advanced economies have grown more unequal since the 1980s, particularly in the United States. The visibility of the richest citizens is motivating demands to remedy the perceived ills that the lopsided distributions create. Two Democratic Party presidential candidates are calling for a tax on US wealth to raise revenues and reduce inequalities at their source. Research by critics finds that less radical solutions, including eliminating loopholes, special breaks and shelters, increasing compliance and modestly raising top tax rates on people and firms would raise the same or more revenue.

Impacts

The higher spending that many presidential candidates plan will require more budget revenues to be raised through selected channels.

Multilateral tax reform talks have more momentum than some other initiatives such as trade, but consensus on tax may prove elusive.

Estimates of how many US wealth holdings may evade payment vary from 15-50%; this imprecision may make it trickier to generate support.

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