Wealth Tax

Most taxes apply to income or spending. A wealth tax applies to the stock of assets a person owns. Supporters argue it can reduce wealth inequality and raise revenue from people whose wealth grows faster than their taxable income.

Several European countries once had wealth taxes, but many abolished them, citing difficulties valuing assets, administrative costs, capital flight and relatively low revenue. Countries that still have forms of wealth tax include Norway, Spain and Switzerland.

For example, a wealth tax of 1% on net wealth above 2,000,000 would charge a person with net wealth of 5,000,000 a tax of 30,000 a year.

Challenges include valuing assets that are not regularly traded, such as private businesses, art and land; the risk that wealthy people move to other countries; and the possibility that people must sell assets to pay the tax if their wealth is not producing much income. Debates about wealth taxes have revived in many countries as concerns about inequality have grown.