Wealth Tax Proposal Estimates

Wealth taxes on ultra-wealthy households have been proposed by Democratic presidential candidates to fight against inequality and raise extra revenue but there is substantial uncertainty about how much revenue can be raised.

Comparing wealth taxes to income taxes shows how seemingly low rates on wealth equate to high income tax rates. Wealth taxes in European countries have had disappointing results and many have been phased out. A wealth tax would face serious administrative and compliance challenges due to valuation difficulties and tax evasion and avoidance issues.

A wealth tax would also induce foreign inflows of hundreds of billions of dollars a year to replace reductions in U.S. savings, which would cause international investors to replace home-grown billionaires as owners of capital.