wealth taxation - pros, cons, evaluation

• What is a wealth tax based on?

  An individual's net worth or assets
• What does a wealth tax target?

  An individual's savings and physical/financial assets
• What is subtracted from an individual's assets when calculating wealth for taxation?

  Any debts associated with those assets
• What does it mean for a wealth tax to be progressive?

  The tax rate rises as wealth rises
• Is a wealth tax a common policy worldwide?

  No, many countries don't have one
• What are some of the pros of a wealth tax?

  • Huge revenue earner for governments
  • Reduces wealth and income inequality
  • Targets windfalls
  • Promotes reallocation of wealth
• Why has wealth exploded over the last four decades?

  Globalization, technology, rising population, higher global income
• How can revenue from a wealth tax improve government finances?

  Run down budget deficits and reduce national debts
• How can wealth tax revenues fund public services?

  By funding healthcare, education, and public transport
• Besides directly reducing wealth inequality, how else can a wealth tax reduce inequality?

  By funding healthier education or benefits
• How can rising inequality affect politics and policies?

  It can lead to undue influence on politicians
• How can a greater concentration of income/wealth affect society?

  It reduces equality of opportunity for others
• What does the term "windfalls" mean in the context of a wealth tax?

  An unexpected rise in the price of an asset
• Why might share prices increase in a productive way?

  Businesses made brilliant decisions or spotted gaps
• How can a wealth tax promote equity and fairness?

  By targeting unproductive windfalls
• How can a wealth tax lead to a more efficient allocation of funds?

  By targeting windfalls
• How could a wealth tax promote reallocation of wealth?

  Away from low-yielding assets to higher-yielding ones
• What types of assets might people move away from due to a wealth tax?

  Low yielding government bonds or savings accounts
• How can the reallocation of wealth due to a wealth tax help the economy?

  It can help fund business growth
• What are some of the cons of a wealth tax?

  • Discourages investment and savings
  • Discourages income generating activity
  • High wealthy may leave the country
  • Risk of loopholes
  • Administrative challenges
• How can a high wealth tax discourage investment?

  Businesses are less keen to invest
• How can a high wealth tax discourage income generating activity?

  By taxing wealth very highly
• What is the classic Laffer Curve concern related to wealth tax?

  The wealthy leaving the country
• What might high-wealth individuals do to avoid paying wealth tax?

  Find loopholes in the tax system
• Why can administrative challenges reduce the effectiveness of a wealth tax?

  Taxing and valuing assets is difficult
• What factors are crucial for a wealth tax to generate more pros than cons?

  The rate and the assets chosen
• What types of assets should a well-designed wealth tax target?

  Less productive assets over more productive ones
• Is it easy to design a wealth tax that targets less productive assets?

  No, it is unbelievably difficult
• What is needed in order to successfully bring in revenue from a wealth tax?

  Strong enforcement is needed
• Is wealth tax more common in Europe, compared to other parts of the world?

  Yes
• What is a wealth tax based on?

  An individual's net worth or assets
• How does a wealth tax differ from an income tax?

  It targets assets rather than income
• Which assets are typically targeted by a wealth tax?

  Savings, property, and financial assets
• What is the formula for calculating wealth tax liability?

  (Assets - Debts) * Tax Rate
• What does it mean for a wealth tax to be progressive?

  The tax rate rises as wealth rises
• Is wealth tax common across the globe?

  No, many countries debate it
• According to the video, what is a major potential benefit of a wealth tax for governments?

  It could be a huge revenue earner
• According to the video, what factors have contributed to the explosion of wealth in recent decades?

  Globalization, technology, rising population, higher incomes
• How could a government utilize the revenue generated from a wealth tax?

  To fund public services like healthcare
• How can a wealth tax indirectly reduce income inequality?

  By funding education and benefits