Progressive Wealth Taxation

This paper discusses the progressive taxation of household wealth. We first discuss what wealth is, how it is distributed, and how much revenue a progressive wealth tax could generate in the United States. We try to reconcile discrepancies across wealth data sources. Second, we discuss the role a wealth tax can play to increase the overall progressivity of the U.S. tax system. Third, we discuss the empirical evidence on wealth tax avoidance and evasion as well as tax enforcement policies. We summarize the key elements needed to make a U.S. wealth tax work in light of the experience of other countries. Fourth, we discuss the real economic effects of wealth taxation on inequality, the capital stock, and economic activity. Fifth, we present a simple tractable model of the taxation of billionaires' wealth that can be applied to the Forbes list of the four hundred richest Americans since 1982 to illustrate the long-run effects of concrete wealth tax proposals on top fortunes.