Wednesday, November 28, 2012
Following up on last week's post, New York Times op-ed: To Reduce Inequality, Tax Wealth, Not Income: Forbes: What a Wealth Tax and Lindsay Lohan Have in Common, by Bernie Kent:
Yesterday’s New York Times contains an op-ed article by Daniel Altman, To Reduce Inequality, Tax Wealth, Not Income, that suggests replacing the income and estate tax with a wealth tax. Much of the article talks about the growing wealth and income inequality in the United States over the past thirty years. Mr. Altman, adjunct associate professor of economics at the New York University Stern School of Business, then suggests some possible rates and exemptions for a wealth tax, such as 2% of wealth over $1,000,000, 1% on wealth between $500,000 and $1,000,000, and no tax on wealth of less than $500,000. Mr. Altman concludes that this tax would have a significant impact on wealth inequality over time and then discusses some of the difficulties in implementation. I believe that he has underestimated two of the problems with a wealth tax which are, if not insurmountable, quite daunting. I have discussed this in a prior blog and will repeat these obstacles now.
While a wealth tax might address inequality in the long run, there are too many problems in implementation to make it a viable addition to the current debate regarding tax policy.