Wealth Tax

Extracted Attributes

• Types

  Net wealth tax (on global net worth), Wealth taxes on selected assets (on specific assets)

• Definition

  A tax on an entity's holdings of assets or an entity's net worth, including cash, bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities, and personal trusts.

• Exclusions

  Typically excludes an individual's liabilities, such as mortgages and other debts.

• Alternative Names

  Capital tax, Equity tax

• Critics' Argument

  Negative economic effects, potential long-run GDP declines (2-5%), loss of hundreds of thousands of jobs, loss in other tax revenue exceeding wealth tax revenue, double or triple taxation.

• Proponents' Argument

  Reduces income inequality, limits accumulation of vast fortunes, incentivizes productive use of assets.

• Example Tax Rate (Spain)

  Tiered rates from 1.7% (€3-€5 million) to 3.5% (above €10 million), applied to amount exceeding threshold.

• Kamala Harris Proposal (US)

  25% minimum tax on unrealized gains for taxpayers whose net wealth exceeds $100 million.

• Example Tax Rate (Switzerland)

  Ranges from 0.3% to over 4% at cantonal level, with thresholds generally starting at CHF 77,000 to CHF 308,000.

• Example Tax Rate (Belgium, 2018)

  0.15% annual tax on financial instruments in securities accounts exceeding €500,000.

• OECD Countries with Personal Wealth Tax (1990)

  12

• OECD Countries with Personal Wealth Tax (2017)

  5 out of 36

Timeline

• 12 OECD countries implemented a personal wealth tax. (Source: Wikipedia)

  1990

• The number of OECD countries implementing a personal wealth tax decreased to 5 out of 36. (Source: Wikipedia)

  2017

• Belgium enacted a 'wealth tax' imposing a 0.15% annual tax on financial instruments in securities accounts exceeding €500,000. (Source: web_search_results)

  2018-02-07

• Regional governments of Madrid, Andalusia, and Galicia appealed Spain's new 'solidarity wealth tax' to the Spanish Constitutional Court. (Source: web_search_results)

  2023

Wealth tax

A wealth tax (also called a capital tax or equity tax) is a tax on an entity's holdings of assets or an entity's net worth. This includes the total value of personal assets, including cash, bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities, and personal trusts (a one-off levy on wealth is a capital levy). Typically, wealth taxation often involves the exclusion of an individual's liabilities, such as mortgages and other debts, from their total assets. Accordingly, this type of taxation is frequently denoted as a net wealth tax. As of 2017, five of the 36 OECD countries had a personal wealth tax (down from 12 in 1990). Proponents often argue that wealth taxes can reduce income inequality by making it harder for individuals to accumulate large amounts of wealth. Many critics of wealth taxes claim that wealth taxes can have a negative economic effect, with economic models showing long-run GDP declines of 2% to 5%, the loss of hundreds of thousands of jobs and a loss in other tax revenue which exceeds the revenue from the wealth tax.

Web Search Results

• Wealth tax - Wikipedia

  A wealth tax (also called a capital tax or equity tax) is a tax on an entity's holdings of assets or an entity's net worth. This includes the total value of personal assets, including cash, bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities "Security (finance)"), and personal trusts (a one-off levy on wealth is a capital levy). Typically, wealth taxation often involves the exclusion of an individual's liabilities, such [...] The Act of 7 February 2018, which is effectively a "wealth tax", announced an annual tax on securities accounts that imposes a 0.15% annual tax on financial instruments kept in securities accounts that are worth more than €500,000 per account holder. [...] A wealth tax serves as a negative reinforcer ("use it or lose it"), which incentivizes the productive use of assets (rather than letting assets accumulate without being used). According to University of Pennsylvania Law School professors David Shakow and Reed Shuldiner, "a wealth tax also taxes capital that is not productively employed. Thus, a wealth tax can be viewed as a tax on potential income from capital." Net wealth taxes can complement rather than replace gift taxes, capital gains

• A Guide to European Countries With No Wealth Tax

  A wealth tax is a tax imposed as a percentage of everything an individual owns (assets), less any liabilities. Liabilities include any debts or financial obligations, such as a mortgage or personal loan. There are two specific types of wealth tax: ### Net wealth tax A tax levied on a person’s global net worth. ### Wealth taxes on selected assets A tax levied on selected assets of what a person owns. ## Countries with Net Wealth Taxes ### Norway [...] Spanish wealth tax has three tiers: 1.7 percent between €3 and €5 million ($3.18 and $5.30 million), 2.1 percent between €3 and €5 million ($3.18 and $5.30 million), and 3.5 above €10 million ($10.83 million). Like Norway, you only pay tax on financial assets above the threshold of €3 million ($3.18 million). Wealth tax is also charged by tier, not a flat rate, so if your worldwide assets amount to €11 million ($11.65 million), the 3.5 percent wealth tax will only apply to the amount exceeding [...] ### Switzerland Switzerland’s wealth tax is determined at the cantonal level, and each canton has its own legislation. The wealth tax typically ranges from 0.3 to 0.5 percent but can be more than four percent. The thresholds generally start at CHF 77,000 to CHF 308,000 ($82,000 and $327,000), with the highest being at or above 3.16 million CHF ($3.4 million). ## Countries with Wealth Taxes on Selected Assets ### France

• The High Cost of Wealth Taxes - Tax Foundation

  wealth taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. violates European law regarding property rights and non-discrimination. In 2023, the regional governments of Madrid, Andalusia, and Galicia appealed the new “solidarity wealth tax” to the Spanish Constitutional Court. [...] Wealth taxes apply a tax rate to an individual’s net wealth, usually above a certain threshold. A person with EUR 2.5 million in wealth and EUR 500,000 in debt would have a net wealth of EUR 2 million. If the tax applies to all wealth above EUR 1 million, then under a 5 percent wealth tax the individual would owe EUR 50,000 in taxes. Compared to income taxes, wealth tax rates seem much lower, but this rate can be deceptive. [...] Wealth taxes generate double or even triple taxation. For safe investments like bonds or bank deposits, a wealth tax of 2 or 3 percent may confiscate all interest earnings, leaving no increase in savings over time. Additionally, if the individual’s wealth is not growing at a rate higher than the tax rate, the tax will ultimately reduce that individual’s wealth.

• Wealth Taxes in Europe, 2024 - Tax Foundation

  Net wealth taxes are recurrent taxes on an individual’s wealth, net of debt. The concept of a net wealth taxA wealth tax is imposed on an individual’s net wealth, or the market value of their total owned assets minus liabilities. A wealth tax can be narrowly or widely defined, and depending on the definition of wealth, the base for a wealth tax can vary. is similar to a real property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible [...] Note: While net wealth taxes are levied on all wealth an individual owns (net of debt), wealth taxes on selected assets cover only part of an individual's wealth (e.g., financial assets).

• The Pros and Cons of Wealth Taxes | Poole Thought Leadership

  One of Vice President Kamala Harris’s centerpiece policy proposals is a wealth tax—a 25-percent minimum tax on unrealized gains for taxpayers whose net wealth exceeds $100 million. If enacted, the tax could bring in more than half a billion dollars of tax revenue over the next decade. [...] The U.S. currently designs its tax system under a “wherewithal to pay” policy principle, meaning that taxes usually correspond to an increase in the taxpayer’s liquid assets—the cash available to pay tax. A wealth tax would require taxpayers to pay at regular intervals on the appreciation of their assets, regardless of whether they have the cash or liquid assets to pay. ### A Reality Check for Unrealized Gains