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Wealth tax
A wealth tax (also called a capital tax or equity tax) is a tax on an entity's holdings of assets or an entity's net worth. This includes the total value of personal assets, including cash, bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities, and personal trusts (a one-off levy on wealth is a capital levy). Typically, wealth taxation often involves the exclusion of an individual's liabilities, such as mortgages and other debts, from their total assets. Accordingly, this type of taxation is frequently denoted as a net wealth tax.
As of 2017[update], five of the 36 OECD countries had a personal wealth tax (down from 12 in 1990).
Proponents often argue that wealth taxes can reduce income inequality by making it harder for individuals to accumulate large amounts of wealth. Many critics of wealth taxes claim that wealth taxes can have a negative economic effect, with economic models showing long-run GDP declines of 2% to 5%, the loss of hundreds of thousands of jobs and a loss in other tax revenue which exceeds the revenue from the wealth tax.
The Global Revenue Statistics Database presents a roster of countries that have documented instances of revenue collected from wealth taxes (the data is limited to 1965-2021). A total of eight countries (Austria, Denmark, Finland, Germany, Netherlands, Norway, Sweden and Switzerland) were known to have collected revenue through a wealth tax in 1965. In the ensuing decades, the number of countries reporting wealth tax revenue increased gradually and reached its peak in 1995, with 12 countries (Austria, Denmark, Finland, France, Germany, Iceland, Italy, Netherlands, Norway, Spain, Sweden and Switzerland) reporting revenue generated from this form of taxation.
As of 2021, five out of 36 OECD countries implement a wealth tax on individuals.
The five countries are Colombia, France, Norway, Spain and Switzerland.
There are jurisdictions of sovereign nation states that require declaration of the taxpayer's balance sheet (assets and liabilities), and from that ask for a tax on net worth (assets minus liabilities), as a percentage of the net worth, or a percentage of the net worth exceeding a certain level. Wealth taxes can be limited to natural persons or they can be extended to also cover legal persons such as corporations. In 1990, about a dozen European countries had a wealth tax, but by 2019, all but three had eliminated the tax because of the difficulties and costs associated with both design and enforcement. Belgium, Norway, Spain, and Switzerland are the countries that raised revenue from net wealth taxes on individuals in 2019 with net wealth taxes accounting for 1.1% of overall tax revenues in Norway, 0.55% in Spain, and 3.6% in Switzerland for 2017.
According to an OECD study on wealth taxes, it is "difficult to firmly argue that wealth taxes would have negative effects on entrepreneurship. The magnitude of the effects of wealth taxes on entrepreneurship is also unclear".
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Wealth tax
A wealth tax (also called a capital tax or equity tax) is a tax on an entity's holdings of assets or an entity's net worth. This includes the total value of personal assets, including cash, bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities, and personal trusts (a one-off levy on wealth is a capital levy). Typically, wealth taxation often involves the exclusion of an individual's liabilities, such as mortgages and other debts, from their total assets. Accordingly, this type of taxation is frequently denoted as a net wealth tax.
As of 2017[update], five of the 36 OECD countries had a personal wealth tax (down from 12 in 1990).
Proponents often argue that wealth taxes can reduce income inequality by making it harder for individuals to accumulate large amounts of wealth. Many critics of wealth taxes claim that wealth taxes can have a negative economic effect, with economic models showing long-run GDP declines of 2% to 5%, the loss of hundreds of thousands of jobs and a loss in other tax revenue which exceeds the revenue from the wealth tax.
The Global Revenue Statistics Database presents a roster of countries that have documented instances of revenue collected from wealth taxes (the data is limited to 1965-2021). A total of eight countries (Austria, Denmark, Finland, Germany, Netherlands, Norway, Sweden and Switzerland) were known to have collected revenue through a wealth tax in 1965. In the ensuing decades, the number of countries reporting wealth tax revenue increased gradually and reached its peak in 1995, with 12 countries (Austria, Denmark, Finland, France, Germany, Iceland, Italy, Netherlands, Norway, Spain, Sweden and Switzerland) reporting revenue generated from this form of taxation.
As of 2021, five out of 36 OECD countries implement a wealth tax on individuals.
The five countries are Colombia, France, Norway, Spain and Switzerland.
There are jurisdictions of sovereign nation states that require declaration of the taxpayer's balance sheet (assets and liabilities), and from that ask for a tax on net worth (assets minus liabilities), as a percentage of the net worth, or a percentage of the net worth exceeding a certain level. Wealth taxes can be limited to natural persons or they can be extended to also cover legal persons such as corporations. In 1990, about a dozen European countries had a wealth tax, but by 2019, all but three had eliminated the tax because of the difficulties and costs associated with both design and enforcement. Belgium, Norway, Spain, and Switzerland are the countries that raised revenue from net wealth taxes on individuals in 2019 with net wealth taxes accounting for 1.1% of overall tax revenues in Norway, 0.55% in Spain, and 3.6% in Switzerland for 2017.
According to an OECD study on wealth taxes, it is "difficult to firmly argue that wealth taxes would have negative effects on entrepreneurship. The magnitude of the effects of wealth taxes on entrepreneurship is also unclear".