Abstract
AbstractIn periods where the national public debt has grown rapidly beyond ‘normal’ levels, the idea of drawing on the stock of national private wealth in order to pay down that debt, whether in whole or in part, has gained currency. ‘Capital levies’ or ‘one‐off wealth taxes’ involve a one‐time charge based upon wealth, normally assessed across a broad range of asset classes (such as savings, investments, property and pensions). The goal of this paper is to outline, and to expand upon, the evidence base available to policymakers contemplating one‐off wealth taxes. It outlines key features of one‐off wealth taxes, relative to somewhat more commonplace recurring wealth taxes. Using a comparative case study methodology, the paper analyses historical examples of one‐off wealth taxation, which have attracted relatively little scholarly attention to date. It explores practical details of tax design and tax administration, as well as aspects of the political and economic context in which these measures were introduced. In so doing, it identifies factors that make one‐off wealth taxes more or less likely to succeed in raising revenue while also minimising any negative social and economic consequences.
Highlights
In periods where the national public debt has grown rapidly beyond ‘normal’ levels, the idea of drawing on the stock of national private wealth in order to pay down that debt, whether in whole or in part, has gained currency
Similar proposals were advanced in the wake of the global financial crisis, and are once again being mooted as a potential response to the COVID-19 pandemic
A comprehensive comparative survey of post-war levies is beyond the scope of a single paper – and, as will be discussed below, these data may prove of only limited value to policymakers contemplating such levies today, given the radically different circumstances in which developed democracies presently find themselves. In light of these limitations, this paper provides a preliminary analysis of two post-war cases: the French Impôt de Solidarité Nationale (ISN) of 1945, and the West German Lastenausgleichsgesetz of 1952
Summary
In periods where the national public debt has grown rapidly beyond ‘normal’ levels, the idea of drawing on the stock of national private wealth in order to pay down that debt, whether in whole or in part, has gained currency. From Schumpeter (1918), Pigou (1920), Keynes (1940) and Hayek (1940), through to the Reform Party incarnation of Donald Trump, the policy has garnered support from individuals of diverse political leanings and intellectual backgrounds. The rationale for such taxes is presented not just in fiscal terms, as a source of revenue, and as a moral imperative – if we are all in this together, the broadest shoulders must bear the biggest burdens
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