Wealth Tax - Arguments Against

Arguments Against

Capital Flight: A 2006 article in The Washington Post titled "Old Money, New Money Flee France and Its Wealth Tax" pointed out some of the harm caused by France's wealth tax. The article gave examples of how the tax caused capital flight, brain drain, loss of jobs, and, ultimately, a net loss in tax revenue. Among other things, the article stated, "Éric Pichet, author of a French tax guide, estimates the wealth tax earns the government about $2.6 billion a year but has cost the country more than $125 billion in capital flight since 1998." The concern about capital flight is lessened where a country such as the United States has worldwide tax jurisdiction and assets may be taxed wherever they are located.

Valuation: Due to valuation and accounting difficulties, wealth taxes systems have had high management costs, for both the taxpayer and the administrating authorities, compared to other taxes. One study in the Netherlands found that the aggregated cost of the tax's yield was roughly five times that of income tax. Advances in access to internet databases over the last decade have made digital filing of tax returns more common and mandatory digital filing of combined wealth and income tax returns could result in automated review and administrative efficiency.