EMMANUEL SAEZ University of California, Berkeley
GABRIEL ZUCMAN University of California, Berkeley
Progressive Wealth Taxation ABSTRACT 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.
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ncome and wealth inequality have increased dramatically in the United States over the last decades (Piketty and Saez 2003; Saez and Zucman 2016; Piketty, Saez, and Zucman 2018). A long-standing concern with wealth concentration is its effect on democratic institutions and policymaking.1
Conflict of Interest Disclosure: Emmanuel Saez holds the Chancellor’s Professorship of Tax Policy and Public Finance and directs the Center for Equitable Growth at the University of California, Berkeley; Gabriel Zucman is an assistant professor of economics at the University of California, Berkeley. Beyond these affiliations, the authors did not receive financial support from any firm or person for this paper or from any firm or person with a financial or political interest in this paper. They are currently not officers, directors, or board members of any organization with an interest in this paper. No outside party had the right to review this paper before circulation. The views expressed in this paper are those of the authors and do not necessarily reflect those of the University of California, Berkeley. The authors have advised several presidential campaigns recently on the issue of a wealth tax. 1. See, for example, Mayer (2017) and Page, Seawright, and Lacombe (2018). Political contributions, for example, are extremely concentrated with 0.01 percent of the population accounting for over a quarter of all contributions (Drutman 2013).
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