Thread by @RichardRubinDC

Today's tax policy reading is the new Saez-Zucman paper on wealth taxes. A few things jumped out at me:

brookings.edu/bpea-articles/…

First, as I noted in our @WSJecon newsletter today, the paper distinguishes potential US wealth tax from failed European taxes. They say citizenship-based taxation, FATCA and exit taxes can prevent some problems.

(FATCA Twitter, I hear you. Direct complaints to the authors.)

@WSJecon Second, they lay out some of the information reporting rules that would be necessary to enforce a wealth tax. Required reporting of bank account balances, debt balances, private-company valuations, etc.

@WSJecon They push back against the Summers-Sarin criticism of their revenue estimates, contending that it ignores the way the wealth tax base is broader than the estate tax base (spousal transfers and charitable bequests).

@WSJecon This section on how a wealth tax should handle foundation assets is going to cause some 👀 in the nonprofit world.

@WSJecon This was a point that in hindsight is obvious, but I hadn't really thought about it this way:

@WSJecon Would a wealth tax harm the economy? This is part of their response to that concern:

@WSJecon They emphasize a large exemption to avoid concerns about liquidity and "aggravated millionaires." (Warren is at $50M).

People with investable assets below that threshold would seem to gain a new, relative advantage.

@WSJecon They have a bunch of interesting estimates on what would happen to wealth concentration and what the revenue-maximizing tax rate might be. They again emphasize the key to enforcement as establishing rules for valuing largely closely held businesses. (Think Koch and Bloomberg.)

@WSJecon I mean, more 👀 here:

@WSJecon And this is their conclusion, which lays out the configuration under which a US wealth tax might be able to succeed. /End