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The Wealth Tax and the Tax Mix

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Listed:
  • Robin Boadway

    (Queen's University, Kingston, Ontario)

  • Pierre Pestieau

    (Université de Liège, Belgium)

Abstract

This paper explores the potential role for a wealth tax as part of the mix of taxes applying to assets in the Canadian tax system. The existing system taxes assets in a variety of ways. Asset incomes, such as interest, dividends, capital gains, and profits, are taxed in the income tax system, albeit imperfectly. The value of assets is taxed by capital taxes on selective types of corporations and by the property tax on residential and non-residential property. Taxes applying to asset transfers include the deemed realization of capital gains on death as well as probate fees. There is neither a general tax on wealth nor a tax on wealth transferred through bequests. There are some glaring shortcomings of existing taxes on assets, such as the preferential treatment of capital gains, the exclusion of imputed returns, and the absence of a tax on inheritances. The authors argue that these deficiencies are best addressed by reforming the capital income tax system and introducing an inheritance tax rather than implementing an annual wealth tax.

Suggested Citation

  • Robin Boadway & Pierre Pestieau, 2022. "The Wealth Tax and the Tax Mix," Canadian Tax Journal, Canadian Tax Foundation, vol. 70(Supplemen), pages 185-208.
    • Handle: RePEc:ctf:journl:v:70:y:2022:i:supp:p:185-208
    DOI: https://doi.org/10.32721/ctj.2022.70.supp.boadway
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    More about this item

    Keywords

    Wealth taxes; income taxes; inheritance taxes; tax policy;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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