Taxing Wealth

Ellen McGrattan

No 15-4, Economic Policy Paper from Federal Reserve Bank of Minneapolis

Abstract: Some have proposed wealth taxation as a means of reducing economic inequality, but such proposals are premature. While economic theory and data measurement have solid grounding when analyzing other forms of taxation, such as income or sales taxes, this is not the case for wealth Total estimates of the two most widely used measures of wealth, fixed assets and net worth, vary widely over the six decades for which data are available. Trend lines in these two wealth measures are rarely correlated. In addition, the relationship between the two?and explanation of why they differ so radically?remains a theoretical puzzle for economists. Given this state of affairs, accurate predictions for the impact, and design, of wealth taxation policies are not yet possible.

Pages: 7 pages
Date: 2015-03-24
New Economics Papers: this item is included in nep-pbe and nep-pub
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