Document Type
Article
Publication Date
2000
Abstract
Income, consumption, and wealth are all possible bases for a tax system in the United States. Scholars have specified the structure of income tax and consumption taxes, but no one has attempted to describe in detail a comprehensive wealth tax for the United States. In this paper, we begin to develop such a structure. In particular, we hypothesize that the combination of a flat rate tax on networth and a flat rate tax on earned income along with an appropriate level of exemptions, could be an attractive tax base. In order to explore the structure of a wealth tax, we first specify the base of the tax. Using the Federal Reserve Board?s Survey of Consumer Finances we then estimate the tax rates that would be needed to raise the same revenue as currently raised by the personal and corporate income tax. We find that rates of 1.57% on net worth and 17.7% on earned income would be required. We also explore the rates that would be required under alternative specifications of the base. Once we have specified the base and the rates, using the SCF data we are then able to explore the distribution of the tax by income class. We compare the distribution to the distribution of the current Federal income tax. We find that the wealth tax we describe is able to achieve the same level of progressivity over much of the income range.
Publication Title
Tax Law Review
Repository Citation
Shakow, David and Shuldiner, Reed, "A Comprehensive Wealth Tax" (2000). All Faculty Scholarship. 1264.
https://scholarship.law.upenn.edu/faculty_scholarship/1264
Included in
Economic Theory Commons, Law and Economics Commons, Policy Design, Analysis, and Evaluation Commons, Political Economy Commons, Taxation-Federal Commons, Tax Law Commons
Publication Citation
53 Tax L. Rev. 499 (2000)