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Taxing Wealth

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  • Ellen R. McGrattan

Abstract

Some have proposed wealth taxation as a means of reducing economic inequality, but such proposals are premature. While economic theory and data measurement have solid grounding when analyzing other forms of taxation, such as income or sales taxes, this is not the case for wealth Total estimates of the two most widely used measures of wealth, fixed assets and net worth, vary widely over the six decades for which data are available. Trend lines in these two wealth measures are rarely correlated. In addition, the relationship between the two?and explanation of why they differ so radically?remains a theoretical puzzle for economists. Given this state of affairs, accurate predictions for the impact, and design, of wealth taxation policies are not yet possible.

Suggested Citation

  • Ellen R. McGrattan, 2015. "Taxing Wealth," Economic Policy Paper 15-4, Federal Reserve Bank of Minneapolis.
  • Handle: RePEc:fip:fedmep:15-4
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    References listed on IDEAS

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    1. Thomas Piketty & Gabriel Zucman, 2014. "Capital is Back: Wealth-Income Ratios in Rich Countries 1700–2010," The Quarterly Journal of Economics, Oxford University Press, vol. 129(3), pages 1255-1310.
    2. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    3. Robert E. Hall, 2004. "Measuring Factor Adjustment Costs," The Quarterly Journal of Economics, Oxford University Press, vol. 119(3), pages 899-927.
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    Cited by:

    1. Brülhart, Marius & Gruber, Jonathan & Krapf, Matthias & Schmidheiny, Kurt, 2019. "Behavioral Responses to Wealth Taxes: Evidence from Switzerland," CEPR Discussion Papers 14054, C.E.P.R. Discussion Papers.
    2. Marius Brülhart & Jonathan Gruber & Matthias Krapf & Kurt Schmidheiny, 2016. "Taxing Wealth: Evidence from Switzerland," NBER Working Papers 22376, National Bureau of Economic Research, Inc.
    3. David Gallusser & Matthias Krapf, 2019. "Joint Income-Wealth Inequality: An Application Using Administrative Tax Data," CESifo Working Paper Series 7876, CESifo.

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