Wealth Tax Neutrality as Drift-Shift Symmetry: A Statistical Physics Formulation

Anders G. Froeseth

Papers from arXiv.org

Abstract: We reformulate the neutral wealth tax framework of Froeseth (2026) in the language of stochastic dynamics and statistical physics. Individual wealth under geometric Brownian motion satisfies a Langevin equation with multiplicative noise; the probability density of wealth across a population then evolves according to a Fokker-Planck equation. A proportional wealth tax at market value enters as a uniform reduction of the drift coefficient, preserving the diffusion structure and all relative probability currents. This drift-shift symmetry is the physical content of tax neutrality. Each channel through which neutrality breaks down in practice, book-value assessment, liquidity frictions, forced dividend extraction, migration, and market impact, corresponds to a specific violation of this symmetry: a state-dependent, asset-dependent, or flow-dependent modification of the Fokker-Planck equation. The framework clarifies when wealth taxation is a benign rescaling of the dynamics and when it introduces genuinely new physics.

Date: 2026-03
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2603.05283 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2603.05283

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().