Taxing the wealthy: the choice between wealth and capital income taxation

Spencer Bastani and Daniel Waldenström

Oxford Review of Economic Policy, 2023, vol. 39, issue 3, 604-616

Abstract: This paper analyses the relative merits of wealth and capital income taxes as instruments for taxing the rich. The main rationale for a wealth tax is to address the incompleteness of the tax code in taxing unrealized capital gains, which can be enormous and concentrated among the wealthy. However, by taxing presumed rather than actual returns, a wealth tax fails to address inequality among taxpayers with the same wealth but different capital incomes. In addition, wealth taxation creates liquidity problems that may adversely affect growth firms and start-ups, which is why wealth taxes typically provide exemptions and deductions for certain business assets. Our empirical analysis, based on Swedish register data, describes the wealth composition of the wealthiest and assesses the distributional incidence of different combinations of wealth and capital income taxation.

Keywords: taxation; wealth; capital; income; liquidity problems; business equity (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1093/oxrep/grad030 (application/pdf)
Access to full text is restricted to subscribers.

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:oup:oxford:v:39:y:2023:i:3:p:604-616.

Access Statistics for this article

Oxford Review of Economic Policy is currently edited by Christopher Adam

More articles in Oxford Review of Economic Policy from Oxford University Press and Oxford Review of Economic Policy Limited
Bibliographic data for series maintained by Oxford University Press ().