Sunday, July 21, 2013
Wealth tax debate comes back, as governments find bailouts hard to justify in a world with "unearned assets" lying around
The next big battle that could really hit wealthier retirees may be “wealth taxes”, according to a Sunday Business article in the New York Times July 21, by Tyler Cowen, p. 6, link here.
In the United States, the main “wealth taxes” in practice are property taxes, and inheritance and estate taxes, which generally have generous exemptions, as often discussed here previously. There are also indirect wealth taxes subsumed in capital gains, and in practical requirements that depositors hold money in accounts with very low interest rates, making it easier for governments to borrow “Wealth” taxes also raise the ideological objection of “double taxation”.
But economists also look at total wealth in an economy, much of it held by richer individuals or families, relative to public debt, and argue that it is hard to argue for bailouts and cutbacks when there is still so much wealth around. This will be particularly true in Europe.