Taxes on wealth: time for another look?

Abstract

Around the world, proposals for new taxes on the stock of wealth (a 'wealth tax') were gaining traction even before the fiscal tumult that has followed the COVID-19 pandemic. Piketty's 'utopian ideal' of a global wealth tax is perhaps the most prominent example. 1 In the US, a new wealth tax proposed by Saez and Zucman (2019) was taken up by prominent candidates for the 2019 Democratic primaries. The OECD recently conducted a wide-ranging review of the wealth taxes already in operation within its member countries, 2 and new empirical research has also examined the impacts of existing wealth taxes in a developing country context. 3 The COVID-19 crisis has accelerated this interest in wealth taxes. First off the mark was Argentina, which in December 2020 passed a new one-off levy on its wealthiest citizens (with assets over $2.5 million) to pay for medical supplies and relief measures. 4 In April 2021, in response to concerns about a $5 trillion surge in the wealth of the world's richest individuals during the pandemic, the UN Secretary-General urged governments to consider introducing a new 'solidarity or wealth tax'. 5 The International Monetary Fund has also recommended that countries consider taxes on high wealth, emphasising the 'symbolic impact of this type of contribution' in the context of recovery from the COVID-19 crisis. 6 These developments follow several decades in which taxes on the stock of wealth were almost entirely off the global political agenda. In fact, starting in the 1990s, many of the countries that already

Wealth Accumulation and De‐Risking Strategies Among High‐Wealth Individuals

“…The valuation of pension, financial, and real property assets, they suggested, is fairly straightforward as much of this data resides in financial institutions or can be calculated with input from regulators (e.g., The Pensions Regulator) and government agencies (e.g., the Valuation Office Agency for property). More problematic is the valuation of business assets, described as hard-to-value assets by Advani et al (2021), given the fact that these are often illiquid assets with no easily accessible benchmarks for valuation. As well, there is a risk of double counting; for example, an individual may include a vehicle as a personal (physical) asset, but it may also be included as a business asset if used for business purposes.…”