Wealth gap

The state of Washington is proposing a wealth tax of 10% on all income over $1 million and a one percent tax on all assets over $250 million. The amount owed on the first will be easy to calculate but not so the second. Very rich people will have to disclose all of their assets and they don’t want to do that. Some will choose to leave the state. This was tried and failed in Europe. Wealth taxes in Europe largely failed to meet expectations, leading most countries to repeal them by 2019. While intended to raise revenue and reduce inequality, these taxes generated minimal income, triggered significant capital flight, and were costly to administer’ Major countries that abolished these taxes include Austria, Denmark, Germany, France, Sweden, Finland, Iceland, Luxembourg, and the Netherlands. The easiest way to tax the rich is using the progressing income tax system. The current top tax bracket is 37% with another with an extra 3.8% on capital gains. When Reagan took office in 1981 the top tax rate was 70%. Another approach is to remove the capital gains category which is now taxed at 20%. The first step in doing that is what the Netherlands just did and that is taxing unrealized capital gains. In the US if you have a large gain in stocks you do not pay any tax until you sell but in the Netherlands you pay tax on gains each year whether you sell or not.