1273
Views
364
Downloads |
Wealth taxation in the United States*
Edward N. Wofff 
Article | Year: 2020 | Pages: 153 - 178 | Volume: 44 | Issue: 2 Received: November 4, 2019 | Accepted: February 10, 2020 | Published online: June 1, 2020
|
FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
|
Country
|
Direct wealth
taxation
|
Transfer tax at death and on gifts
|
Capital gains
taxation
|
Wealth, death, and gift tax receipts as % of total
tax revenuea
|
|
Australia
|
no
|
none
|
income
|
0.01
|
|
Austria
|
yes
|
inheritance
|
none
|
0.51
|
|
Belgium
|
no
|
inheritance
|
none
|
0.58
|
|
Canada
|
no
|
none
|
income
|
0.03
|
|
Denmark
|
yes
|
inheritance
|
separate
|
0.92
|
|
Finland
|
yes
|
inheritance
|
income
|
0.50
|
|
France
|
1982-87
|
inheritance
|
income
|
0.85
|
|
Germany
|
yes
|
inheritance
|
none
|
0.42
|
|
Greece
|
no
|
inheritance
|
none
|
0.94
|
|
Iceland
|
yes
|
inheritance
|
income
|
-
|
|
Ireland
|
1975-77
|
inheritance
|
separate
|
0.30
|
|
Italy
|
no
|
estate/inheritance
|
none
|
0.23
|
|
Japan
|
no
|
inheritance
|
income
|
1.19
|
|
Luxembourg
|
yes
|
inheritance
|
income
|
0.51
|
|
Netherlands
|
yes
|
inheritance
|
none
|
0.94
|
|
New Zealand
|
no
|
estate
|
none
|
0.19
|
|
Norway
|
yes
|
inheritance
|
income
|
0.61
|
|
Portugal
|
no
|
inheritance
|
none
|
0.83
|
|
Spain
|
yes
|
inheritance
|
income
|
0.49
|
|
Sweden
|
yes
|
inheritance
|
income
|
0.68
|
|
Switzerland
|
yes
|
estate/inheritance
|
income
|
3.06
|
|
Turkey
|
no
|
inheritance
|
income
|
0.19
|
|
United Kingdom
|
no
|
estate
|
none
|
0.64
|
|
United States
|
no
|
estate
|
income
|
0.77
|
Source: OECD (1988).
|
Country
|
Direct wealth taxation
|
Transfer tax at death and on gifts
|
|
Australia
|
no
|
none
|
|
Austria
|
no
|
none
|
|
Belgium
|
no
|
inheritance
|
|
Canada
|
no
|
none
|
|
Denmark
|
no
|
inheritance
|
|
Finland
|
no
|
inheritance
|
|
France
|
yes
|
inheritance
|
|
Germany
|
no
|
inheritance
|
|
Greece
|
no
|
inheritance
|
|
Iceland
|
no
|
inheritance
|
|
Ireland
|
no
|
inheritance
|
|
Italy
|
no
|
inheritance
|
|
Japan
|
no
|
inheritance
|
|
Luxembourg
|
no
|
inheritance
|
|
Netherlands
|
yesa
|
inheritance
|
|
New
Zealand
|
no
|
none
|
|
Norway
|
yes
|
none
|
|
Portugal
|
no
|
inheritance
|
|
Spain
|
yes
|
inheritance
|
|
Sweden
|
no
|
none
|
|
Switzerland
|
yesa
|
estate/inheritancea
|
|
Turkey
|
no
|
inheritance
|
|
United
Kingdom
|
no
|
estate
|
|
United
States
|
no
|
estate
|
Note: a Provincial (or canton) tax. Sources: European Commission (2014); Deloitte (2014); OECD (2018) and Cole (2015).
|
Taxpayer
type
|
Thresholds ($)
|
|
single person
|
74,000
|
|
married couple
|
121,000
|
|
Tax rate
schedule (%)
|
Tax base ($)
|
|
0.05
|
to 180,000
|
|
0.10
|
next 295,000
|
|
0.15
|
next 493,000
|
|
0.20
|
next 722,000
|
|
0.25
|
next 710,000
|
|
0.30
|
over 2,400,000
|
|
Exclusions
|
|
|
household effects
|
|
pensions/annuities
|
|
Ceiling
|
|
none
|
Source: OECD (1988).
|
|
Ratio of income tax
to family income (%)
|
Swiss wealth tax
|
% of families
paying wealth tax
|
|
% of income
|
Ratio to income tax
|
|
All families
|
9.6
|
1.0
|
0.10
|
44.3
|
|
A. Income class
($)
|
|
|
|
|
|
Under 15,000
|
-3.1
|
2.0
|
-
|
14.6
|
|
15,000-24,999
|
-3.2
|
0.4
|
-
|
23.7
|
|
25,000-49,999
|
1.6
|
0.2
|
0.14
|
32.7
|
|
50,000-74,999
|
5.9
|
0.4
|
0.06
|
46.3
|
|
75,000-99,999
|
7.6
|
0.5
|
0.07
|
58.2
|
|
100,000-249,999
|
11.5
|
0.9
|
0.07
|
77.8
|
|
250,000 and over
|
23.4
|
2.2
|
0.10
|
98.1
|
|
B. Wealth class
($)
|
|
|
|
|
|
Under 100,000
|
4.7
|
0.0
|
0.00
|
3.6
|
|
$100,000-249,999
|
7.6
|
0.0
|
0.01
|
89.6
|
|
$250,000-499,999
|
9.1
|
0.2
|
0.02
|
100.0
|
|
$500,000-749,999
|
10.3
|
0.7
|
0.07
|
100.0
|
|
$750,000-999,999
|
11.6
|
0.9
|
0.08
|
100.0
|
|
1,000,000-2,499,999
|
14.5
|
1.0
|
0.07
|
100.0
|
|
2,500,000-4,999,999
|
20.7
|
2.1
|
0.10
|
100.0
|
|
5,000,000 and over
|
25.1
|
3.8
|
0.15
|
100.0
|
|
C. Age class
|
|
|
|
|
|
Under 35
|
5.8
|
0.2
|
0.03
|
13.1
|
|
35-54
|
13.6
|
0.8
|
0.06
|
40.9
|
|
55-69
|
14.7
|
1.6
|
0.11
|
59.4
|
|
70 and over
|
10.0
|
2.4
|
0.24
|
67.7
|
|
D.
Household type
|
|
|
|
|
|
Married couple
|
13.4
|
1.2
|
0.09
|
50.4
|
|
Males, unmarried
|
13.6
|
1.1
|
0.08
|
36.3
|
|
Females, unmarried
|
6.8
|
0.6
|
0.09
|
36.1
|
|
E. Race or
ethnicity
|
|
|
|
|
|
White
|
13.8
|
1.3
|
0.09
|
52.9
|
|
African-American
|
5.4
|
0.3
|
0.05
|
19.8
|
|
Hispanic
|
5.0
|
0.3
|
0.06
|
20.4
|
|
Other
|
12.4
|
1.2
|
0.09
|
46.8
|
Note: * Based on the Canton of Zurich. Source: Author’s calculations from the 2016 SCF. The figures are based on the Swiss tax schedule as spelled out in Table 3 with brackets updated to 2016 dollars on the basis of the CPI-U.
|
|
|
Age group
|
Family type
|
Race
|
|
All
|
18-34
|
35-54
|
55-69
|
70+
|
Married couple
|
Unmarried male
|
Unmarried female
|
Whites and others
|
Blacks and Hispanics
|
|
Pre-tax
income
|
0.574
|
0.439
|
0.548
|
0.612
|
0.574
|
0.538
|
0.575
|
0.438
|
0.578
|
0.437
|
|
Original
post-tax income
|
0.532
|
0.407
|
0.504
|
0.572
|
0.537
|
0.491
|
0.530
|
0.404
|
0.537
|
0.403
|
|
New post-income/Swiss
wealth tax
|
0.528
|
0.406
|
0.501
|
0.568
|
0.528
|
0.487
|
0.525
|
0.403
|
0.533
|
0.401
|
Note: * Based on the Canton of Zurich. Source: Author’s calculations from the 2016 SCF. See text for details on tax calculations.
|
|
Baseline total wealth tax revenue (billions)
|
Exclude
|
Add
|
|
Home equity on principal home
|
Businesses
|
Trust funds
|
Defined contribution pension plans
|
Defined benefit pension wealth
|
|
All families
|
182.1
|
-17.0
|
-29.9
|
-3.8
|
-19.1
|
9.1
|
|
A. Income class ($)
|
|
|
|
|
|
|
|
Under 15,000
|
3.6
|
-17.5
|
-59.0
|
-0.2
|
-3.9
|
1.4
|
|
15,000-24,999
|
1.7
|
-40.8
|
-20.0
|
-1.6
|
-13.7
|
8.8
|
|
25,000-49,999
|
3.7
|
-47.3
|
-8.7
|
-2.3
|
-22.5
|
43.6
|
|
50,000-74,999
|
6.1
|
-30.7
|
-16.4
|
-3.7
|
-28.3
|
35.1
|
|
75,000-99,999
|
7.7
|
-28.9
|
-16.9
|
-0.1
|
-30.8
|
25.7
|
|
100,000-249,999
|
33.1
|
-22.6
|
-19.6
|
-3.8
|
-30.6
|
19.7
|
|
250,000 and over
|
107.1
|
-12.2
|
-34.8
|
-4.3
|
-14.7
|
2.2
|
|
B. Wealth class ($)
|
|
|
|
|
|
|
|
Under 100,000
|
0.0
|
-68.5
|
-2.7
|
0.0
|
-44.5
|
-
|
|
100,000-249,999
|
0.8
|
-71.5
|
-5.9
|
-0.4
|
-37.4
|
223.8
|
|
250,000-499,999
|
2.8
|
-60.5
|
-5.8
|
-1.8
|
-40.9
|
123.7
|
|
500,000-749,999
|
5.9
|
-57.9
|
-10.5
|
-1.9
|
-47.9
|
31.7
|
|
750,000-999,999
|
6.0
|
-40.9
|
-10.3
|
-2.4
|
-42.7
|
13.6
|
|
1,000,000-2,499,999
|
16.6
|
-23.9
|
-12.7
|
-1.7
|
-32.1
|
17.2
|
|
2,500,000-4,999,999
|
23.7
|
-25.0
|
-24.0
|
-2.1
|
-28.8
|
6.0
|
|
5,000,000 and over
|
107.2
|
-9.0
|
-36.9
|
-4.8
|
-11.3
|
1.0
|
|
C. Age class
|
|
|
|
|
|
|
|
Under 35
|
3.0
|
-12.3
|
-54.3
|
-9.5
|
-5.7
|
1.4
|
|
35-54
|
47.2
|
-17.7
|
-42.9
|
-3.0
|
-15.9
|
4.3
|
|
55-69
|
74.7
|
-16.9
|
-25.5
|
-2.8
|
-22.2
|
11.8
|
|
70 and over
|
38.1
|
-16.8
|
-20.7
|
-6.3
|
-18.1
|
10.3
|
|
D. Household type
|
|
|
|
|
|
|
|
Married couple
|
138.0
|
-16.2
|
-30.3
|
-3.2
|
-19.8
|
8.5
|
|
Males, unmarried
|
14.9
|
-15.4
|
-38.0
|
-5.5
|
-11.8
|
7.2
|
|
Females, unmarried
|
10.2
|
-29.8
|
-12.8
|
-9.9
|
-20.6
|
19.8
|
|
E. Race or ethnicity
|
|
|
|
|
|
|
White
|
150.2
|
-16.5
|
-28.8
|
-4.0
|
-19.6
|
8.8
|
|
African-American
|
2.5
|
-19.0
|
-46.1
|
-3.0
|
-18.5
|
43.4
|
|
Hispanic
|
2.2
|
-24.1
|
-58.2
|
-2.4
|
-8.1
|
6.2
|
|
Other
|
8.1
|
-24.1
|
-39.0
|
-0.3
|
-13.5
|
4.8
|
|
Memo: Post-income and wealth tax Gini coeff. for all
households
|
|
|
|
|
|
|
|
|
0.528
|
0.528
|
0.529
|
0.528
|
0.529
|
0.528
|
Note: * Based on the Canton of Zurich. Source: Author’s calculations from the 2016 SCF. See text for details on tax calculations.
Source: Authors’ calculations.
Table 1Wealth taxation systems among OECD countries on personal wealth, mid-1980s DISPLAY Table
Table 2Wealth taxation systems among OECD countries, 2015 DISPLAY Table
Table 3Details of the direct wealth taxation system of Switzerland, 2016* DISPLAY Table
Table 4Income tax and wealth taxes modeled after the Swiss system, 2016* DISPLAY Table
Table 5Distributional effects of the Swiss wealth taxation system by age group, family type and race (Gini coefficients), 2016* DISPLAY Table
Table 6Percentage change in total wealth tax collection from changes in the wealth tax base, 2016* DISPLAY Table
Figure 1Revenue, incidence and distributional effects of Swiss and Warren wealth taxes DISPLAY Figure
* This article is based on the findings published in Wolff (  1995). An earlier version of this paper was published as NBER Working Paper No. 26544. The author would like to thank two anonymous referees for their valuable comments and suggestions.
1 A related tax is the property tax, levied on the value of all real property (buildings and land). Though this is often overlooked in current debates on tax reforms, the property tax was the third-largest source of household tax revenue in 1985 and has been rising steeply in years since then. This tax is generally levied by local governments in the United States and, as a result, will not be discussed in this paper. Of the twenty-four members of the OECD, all but Italy and Portugal had a separate tax on real property in the mid-1980s.
2 Gifts within three years of death were (and still are) treated as transfers at death.
3 Most of the information in this section was garnered from the OECD ( 1988). The figures in this section are as of 1988 in most cases.
4 Japan also had a direct wealth tax for a short period after World War II.
5 In Switzerland, the wealth tax was (and is) actually a provincial (canton) tax, so that provisions varied among cantons. The example here is based on the Canton of Zurich.
6 There was a technical issue related to debts on excluded assets. Since the wealth tax was based on the total value of assets less debts, the appropriate treatment would have been to exclude debts on assets that were themselves excluded from the tax base. However, because of the difficulty of assigning specific debts (such as bank overdrafts) to specific assets, countries varied in their treatment of this problem.
7 Separately, it introduced a 30 percent flat tax rate on capital gains, dividends and interest.
8 The “Swiss” wealth tax used in the simulations here is based on the Canton of Zurich (see OECD, 1988: 252).
9 See Table B-19 in U.S. Council of Economic Advisors ( 2018).
10 On the other hand, the value of antiques, jewelry, art objects and other “valuables” are included in the SCF in the category “other assets”.
11 It should be noted that in the simulation all assets are appraised at market value (since this is the only valuation available).
12 The revenue effect estimated on the basis of the Swiss system (2.2 percent of total U.S. tax revenues) was not very far out of line with the actual experience of that country; in 1985, the Swiss wealth tax accounted for 2.3 percent of total tax revenues in Switzerland. More recent data are not available.
13 The sources for this section are: U.S. Council of Economic Advisors ( 2018, table B-19) and BEA ( 2020).
14 Piketty ( 2014) has proposed a unified wealth tax across countries to address the problem of capital flight.
15 I would like to thank an anonymous referee for pointing out these issues.
|
|
June, 2020
II/2020 |
