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Capital wealth taxation as a potential remedy for excessive capital wealth inequality


  • James A. Yunker


In this paper, it is first shown that a simple model of inheritance and chance, neither of which involve entrepreneurial or other productive contributions on the part of the capital owner, is quite successful in predicting the empirical capital wealth distribution in the United States as indicated by data taken from the 2004 Survey of Consumer Finances. To the extent that an extremely high level of capital wealth inequality does not play an essential role in maintaining effort incentives and economic prosperity, the possibility of reducing it via taxation becomes more attractive. Estate taxation has been in existence for a long time, but model simulations suggest that while it can slow the rise of capital wealth inequality from an initial condition of perfect equality, once capital wealth inequality has reached a high level, it is ineffective in reducing this level. However, further model simulations indicate that even a relatively modest rate of annual capital wealth taxation can be highly effective toward this end.

Suggested Citation

  • James A. Yunker, 2010. "Capital wealth taxation as a potential remedy for excessive capital wealth inequality," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 33(1), pages 83-104, October.
  • Handle: RePEc:mes:postke:v:33:y:2010:i:1:p:83-104

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    References listed on IDEAS

    1. Daniel Kahneman & Dan Lovallo, 1993. "Timid Choices and Bold Forecasts: A Cognitive Perspective on Risk Taking," Management Science, INFORMS, vol. 39(1), pages 17-31, January.
    2. Stephen P. Dunn, 2001. "Bounded Rationality Is Not Fundamental Uncertainty: A Post Keynesian Perspective," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 23(4), pages 567-587, July.
    3. Ilene Grabel, 2003. "Averting crisis? Assessing measures to manage financial integration in emerging economies," Cambridge Journal of Economics, Oxford University Press, vol. 27(3), pages 317-336, May.
    4. Gary A. Dymski, 1988. "A Keynesian Theory of Bank Behavior," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 10(4), pages 499-526, July.
    5. Taylor, Lance, 1998. "Capital Market Crises: Liberalisation, Fixed Exchange Rates and Market-Driven Destabilisation," Cambridge Journal of Economics, Oxford University Press, vol. 22(6), pages 663-676, November.
    6. John Harvey, 2002. "Keynes' Chapter Twenty-Two: A System Dynamics Model," Working Papers 200201, Texas Christian University, Department of Economics.
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    Cited by:

    1. Schnellenbach, Jan, 2012. "The economics of taxing net wealth: A survey of the issues," Freiburg Discussion Papers on Constitutional Economics 12/5, Walter Eucken Institut e.V..


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