Recent discussions of a proposed wealth tax for the United States have included little information about trends in wealth taxation among other developed nations. However, those trends and the current state of wealth taxes in OECD countries can provide context for U.S. proposals.
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The arguments for a new surtax on corporate book income misconstrues why there are differences between a corporation’s taxable income and book income.
The international experience with wealth taxes should serve as a warning to the U.S. A wealth tax would reduce the size of the economy, shrink national income, and significantly distort international capital flows.
Biden, Sanders, and Warren have staked out similar plans to increase capital gains taxes on the wealthiest Americans. While all three candidates have called for taxing capital gains at ordinary income rates, the phase-in levels and top marginal tax rates vary.
Taken together, these proposed tax changes would significantly raise marginal and effective tax rates and increase the cost of capital, all of which would lead to a reduced level of output and less revenue than anticipated.
Elizabeth Warren released a detailed plan on how she would fund Medicare For All, proposing a wealth tax, financial transactions tax, mark-to-market taxation of capital gains income, and a country-by-county minimum tax, among other reforms.