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Progressive wealth tax: An inquiry into Biden’s tax policy

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  • Nguyen, Hien Phuc
  • Khieu, Hoang

Abstract

In this paper, we study the distributional effect of a progressive wealth tax. We show that there exists a threshold level below which raising the upper bound of the tax rate reduces inequality of wealth and consumption in the long run. Such a threshold increases when the difference between the rate of return on wealth and the growth rate, r−g, and the level of wealth inequality relative to that of labour income inequality rise. The room for raising the tax progressivity to reduce inequality is restricted if r−g falls and labour income inequality rises relatively to wealth inequality.

Suggested Citation

  • Nguyen, Hien Phuc & Khieu, Hoang, 2021. "Progressive wealth tax: An inquiry into Biden’s tax policy," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 735-742.
    • Handle: RePEc:eee:ecanpo:v:72:y:2021:i:c:p:735-742
    DOI: 10.1016/j.eap.2021.10.011
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    References listed on IDEAS

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    More about this item

    Keywords

    Progressive wealth tax; Wealth inequality; Consumption inequality; Biden’s tax policy; r−g;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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