This House would tax wealth above $100M at 2% annually.

econ

Wealth taxes have been tried in 12 OECD countries; 9 of them repealed them. Yet the policy keeps re-emerging in U.S. presidential platforms. The empirics are messier than either side admits.

Background

France ran a wealth tax (ISF) from 1989 to 2017. Studies by Eric Pichet and the IMF found it raised roughly €4 billion annually but cost the French economy an estimated €125 billion in cumulative capital flight and reduced investment. Norway and Switzerland still have wealth taxes that perform much better, largely because both are small countries with strong enforcement and limited exit options for citizens.

The US version has a different shape. Senators Warren and Sanders have proposed thresholds at $50M or $100M with rates between 1% and 3%. The University of California study estimated the Warren plan would raise $2.75 trillion over a decade. Critics including former Treasury Secretary Lawrence Summers argue the valuation problem (how do you mark to market a 5% stake in SpaceX?) makes the rate effectively unenforceable. Defenders point out that estate taxes solve identical problems annually.

Government opens with

Concentrated capital distorts political markets; an annual tax restores accountability.

Opposition responds with

Wealth fled every European wealth tax; the U.S. would lose more revenue than it raised.