How much tax revenue will the government earn on the assets it owns rather than on its annual income?

It has been pointed out that the gap between rich and poor is widening in recent years, and it is also reported that the world's 2100 richest people have more wealth than the 4.6 billion poorest people . Meanwhile, there is a growing demand for the introduction of a ' wealth tax, ' which taxes the remaining assets after deducting liabilities from total assets, and a table showing 'how much tax income does the wealth tax bring to the government?' I am.

Modeling a Wealth Tax

Wealth tax is a tax levied on net assets less total assets minus total liabilities, and is collected separately from the income tax levied on annual income. It is believed that wealth taxation can be adjusted by taxing assets, but it has already been abolished in many countries that once introduced wealth tax, and wealth tax exists at the time of article creation. Only in some countries such as Switzerland and Norway. Wealth tax was also introduced in Japan from 1950 to 1953, but it has been abolished due to the small amount of total tax revenue and problems related to tax enforcement.

Wealth tax debates are intensifying even in the United States, where the number of outstanding wealthy people is particularly high and complaints about the wealthy people not paying proper taxes are increasing. Senator Elizabeth Warren, who ran for the 2020 US presidential election, drew attention by proposing a 'wealth tax' for wealthy individuals with assets of more than $50 million (about 5.3 billion yen).

Also, in California, led by Rob Bonta legislator, a bill of 'imposing 0.4% wealth tax on the top 0.15% wealthy people with assets of more than $ 30 million (about 3.2 billion yen)' Are discussing . It is said that about 30,400 people living in California are subject to wealth tax, and if introduced, it will bring in $ 7.5 billion (about 800 billion yen) of tax revenue to California annually.

The wealth tax is levied on the net assets owned by the target person every year, so if the tax rate is '1%', 99% of the property will remain after the wealth tax is collected in the first year. If there is no change in property, 1% is collected again from the 99% remaining in the following year as a wealth tax, and about 98% of the wealth in the first year remains.

For example, suppose there is a person named 'A' who has a wealth taxable property in his twenties, and as long as Mr. A holds the assets subject to wealth tax collection, Wealth taxes on assets continue to be levied. Ignoring fluctuations in property, if wealth tax continues to be collected from Mr. A for 60 years, Mr. A's assets after 60 years will be 54.7% of the first year. Wealth tax is a system in which even if the tax rate collected in one year is low, it is continuously levied and a large tax revenue is brought to the government.

If you continue to collect wealth tax for 60 years, here is a table showing how much tax revenue will be brought to the government by tax rate. If the wealth tax is set at 5%, after 60 years 95% of the taxable assets owned by the Target will be government owned.

Wealth tax rate Government share
0.1% 6%
0.5% 26%
1.0% 45%
2.0% 70%
3.0% 84%
4.0% 91%
5.0% 95%

The above table does not take into account changes in the assets of the Target Company or the possibility that the Target Company's assets may fall below the taxables of the Wealth Tax before 60 years have passed. Nevertheless, at first glance it can be seen that the lower tax rates bring dramatic tax revenues to the government.

Wealth tax may be an effective solution for correcting the uneven distribution of wealth, but the introduction of the wealth tax may cause the wealthy people to move, resulting in the risk that tax revenue will decrease. I am. However, a study by Stanford University analyzing 45 million tax records shows that ``Millionaires with more than $1 million in annual income can change their residence to avoid tax. It is also known that it is 'poor'.

An analysis of 45 million tax records shows that millionaires do not move even if they raise taxes-GIGAZINE

by 401(K) 2012

in Note, Posted by log1h_ik