Archive for April 28th, 2014

April 28, 2014

Wealth Tax

Thomas Piketty

A wealth tax is a levy based on the aggregate value of all household assets (e.g. owner-occupied housing; cash, bank deposits, money funds, and savings in insurance and pension plans; investment in real estate and unincorporated businesses; and corporate stock, financial securities, and personal trusts). A wealth tax is a tax on the accumulated stock of purchasing power, in contrast to income tax, which is a tax on the flow of assets (a change in stock).

Some governments 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. The tax is in place for both natural persons and, in some cases, legal persons such as corporations. In France, the net worth tax on natural persons is called the ‘solidarity tax on wealth.’ In other places, the tax may be called a ‘capital tax,’¬†an ‘equity tax,’ a ‘net worth tax,’ a ‘net wealth tax,’ or just a ‘wealth tax.’

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