One-off wealth taxes: theory and evidence

Abstract

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. ‘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.