Wealth taxation in the United States

N. Wolff, Edward

doi:10.3326/pse.44.2.1.

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Wealth taxation in the United States*

Edward N. Wofff

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https://doi.org/10.3326/pse.44.2.1

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Table 1
Wealth taxation systems among OECD countries on personal wealth, mid-1980s

Country	Direct wealth taxation	Transfer tax at death and on gifts	Capital gains taxation	Wealth, death, and gift tax receipts as % of total tax revenue^a
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

Note: ^a Figures are for 1985.

Source: OECD (1988).

Table 4
Income tax and wealth taxes modeled after the Swiss system, 2016*

	Ratio of income tax to family income (%)	Swiss wealth tax		% of families paying wealth tax
	Ratio of income tax to family income (%)	% of income	Ratio to income tax	% of families paying wealth 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.

Table 6
Percentage change in total wealth tax collection from changes in the wealth tax base, 2016*

	Baseline total wealth tax revenue (billions)	Exclude				Add
	Baseline total wealth tax revenue (billions)	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.

BEA, 2020. National Income and Product Accounts. Washington: Bureau of Economic Analysis.

Cole, A., 2018. Estate and Inheritance Taxes around the World. Washington: Tax Foundation.

Deloitte, 2014. Taxation and Investment in Turkey 2014: Reach, relevance and reliability. Deloitte.

European Commission, 2014. Cross-country Review of Taxes on Wealth and Transfers of Wealth. Bruxelles: European Commission.

Forbes, 2019. The Forbes 400: The Definitive Ranking Of The Wealthiest Americans.

OECD, 1988. Taxation of Net Wealth, Capital Transfers and Capital Gains of Individuals. Paris: OECD.

OECD, 1992. National Accounts, Detailed Tables, 1978-1990, Vol. 2. Paris: OECD.

OECD, 2018. The Role and Design of Net Wealth Taxes in the OECD. Paris: OECD [CrossRef]

Piketty, T., 2014. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press.

U.S. Council of Economic Advisers, 2001. Economic Report of the President. Washington: U.S. Government Printing Office.

U.S. Council of Economic Advisers, 2018. Economic Report of the President: Together with The Annual Report of the Council of Economic Advisers. Washington: U.S. Government Printing Office.

Wolff, E. N., 1995. Top heavy: A Study of Increasing Inequality of Wealth in America. New York: The Twentieth Century Fund Press.

Wolff, E. N., 2017. A Century of Wealth in America. Cambridge, MA: Harvard University Press.

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