Progressive wealth tax: An inquiry into Biden’s tax policy

Hien Phuc Nguyen and Hoang Khieu

Economic Analysis and Policy, 2021, vol. 72, issue C, 735-742

Abstract: In this paper, we study the distributional effect of a progressive wealth tax. We show that there exists a threshold level below which raising the upper bound of the tax rate reduces inequality of wealth and consumption in the long run. Such a threshold increases when the difference between the rate of return on wealth and the growth rate, r−g, and the level of wealth inequality relative to that of labour income inequality rise. The room for raising the tax progressivity to reduce inequality is restricted if r−g falls and labour income inequality rises relatively to wealth inequality.

Keywords: Progressive wealth tax; Wealth inequality; Consumption inequality; Biden’s tax policy; r−g (search for similar items in EconPapers)
JEL-codes: C02 D31 E21 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:72:y:2021:i:c:p:735-742

DOI: 10.1016/j.eap.2021.10.011

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