Definition
A wealth tax is a levy on the total value of personal assets, including: bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities, and personal trusts. Typically liabilities are deducted, hence it is sometimes called a net wealth tax.
Wealth Tax
What is ‘Wealth Tax’
It is a tax based on the market value of assets that are owned. These assets include, but are not limited to, cash, bank deposits, shares, fixed assets, private cars, assessed value of real property, pension plans, money funds, owner occupied housing and trusts. An ad valorem tax on real estate and an intangible tax on financial assets are both examples of a wealth tax. Although many developed countries choose to tax wealth, the United States has generally favored taxing income.
Explaining ‘Wealth Tax’
Wealth tax is imposed on the wealth possessed by individuals in a country. The tax is on a person’s net worth which is assets minus liabilities. Not all countries have this type of tax; Austria, Denmark, Germany, Sweden, Spain, Finland, Iceland and Luxenberg have abolished it in recent years. The United States doesn’t impose wealth tax but requires income and property taxes.
Further Reading
- The economic consequences of the french wealth tax – papers.ssrn.com [PDF]
- The wealth tax and entrepreneurial activity – journals.sagepub.com [PDF]
- Tax data for wealth concentration analysis: An application to Spanish wealth tax – onlinelibrary.wiley.com [PDF]
- The effects of income, wealth, and capital gains taxation on risk-taking – www.sciencedirect.com [PDF]
- The rise and fall of swedish wealth taxation – content.sciendo.com [PDF]
- The impact of minimum taxation by an imputable wealth tax on capital budgeting and business strategy of German companies – link.springer.com [PDF]
- A European net wealth tax – www.econstor.eu [PDF]
- America's regressive wealth tax: state and local property taxes – www.tandfonline.com [PDF]
