Should a wealth tax compel the ultra-rich to fork some over?

Plans for a wealth tax, which is dividing France, have gotten popular around the world as inequality has widened and government debt has risen. NYT

- PATRICIA COHEN

There have been calls to tax the rich ever since there have been taxes. One idea, though, arouses particularly fevered reactions: a tax on wealth, not just paycheques.

A clash over such a plan is now dividing France, where there was a raucous debate in Parliament last month over proposals for a wealth tax. But the approach has been roiling politics in the United States and Europe for years as inequality has risen to staggering levels and public debt has busted government budgets.

At the Labour Party conference in Britain in October, delegates called for a wealth tax. Surveys have shown three-quarters of Britons back the idea. Debate over the concept has been revived even in countries like Germany and Ireland that had previously repealed their wealth taxes. And the Tax Observatory, a research organisation funded by the European Union, has proposed a global minimum wealth tax of 2% on the world’s roughly 3,000 billionaires.

To supporters, taxing an individual’s total assets — stocks, real estate, yachts, diamond tiaras, racehorses, art, fine wines, private islands and jets — rather than just income is one of the few ways to get people with dynastic wealth to pay their fair share.

It is also necessary, they argue, to dilute the increasing political power of the super-rich.

To opponents, wealth taxes are outlandish penalties on innovation and productivity and discourage investment and cripple growth. They would also be a logistical nightmare to administer, they add. How would government tax collectors go about assessing a family’s valuable collections of Ferraris, Chippendales, Picassos, NFTs and Birken bags every year?

A LONG PRECEDENT

Wealth taxes, though not as common as some other levies, have actually been around for a long time.

If you think about it, real estate taxes are one form of a wealth tax that targets a particular asset.