IMF How To Notes

How to Tax Wealth

By Shafik Hebous, Alexander D Klemm, Geerten Michielse, Carolina Osorio Buitron

March 8, 2024

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Shafik Hebous, Alexander D Klemm, Geerten Michielse, and Carolina Osorio Buitron. How to Tax Wealth, (USA: International Monetary Fund, 2024) accessed December 21, 2024

Summary

Tackling income and wealth inequality is at the top of the policy agenda in many countries. This note discusses three approaches of wealth taxation, based on (1) returns with a capital income tax, (2) stocks with a wealth tax, and (3) transfers of wealth through an inheritance (or estate) tax. Taxing actual returns is generally less distortive and more equitable than a wealth tax. Hence, rather than introducing wealth taxes, reform priorities should focus on strengthening the design of capital income taxes (notably capital gains) and closing existing loopholes, while harnessing technological advances in tax administration—including cross-border information sharing—to foster tax compliance. The inheritance tax is important to address the buildup of dynastic wealth.

Subject: Capital income, Capital income tax, Economic sectors, Financial crises, Income, Income and capital gains taxes, National accounts, Tax policy, Taxes, Wealth tax

Keywords: Capital gains, Capital income, Capital income tax, Estate tax, Estate tax tax rate, Global, Income, Income and capital gains taxes, Income inequality, Income taxation, One-off wealth taxes, Tax administration, Tax loopholes, Tax planning, Tax sensitivity, Wealth inequality, Wealth tax

Publication Details

  • Pages:

    39

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    How-To Note No 2024/001

  • Stock No:

    HTNEA2024001

  • ISBN:

    9798400266881

  • ISSN:

    2522-7912

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