Wealth Taxes and Post-Growth: How different tax designs align with different goals

TL;DR

This paper evaluates how different wealth tax designs can support post-growth goals like wealth redistribution, eradicating extreme wealth, curbing rent-seeking, and reducing CO2 emissions, using household data from 18 EU countries.

Contribution

It provides an empirical microsimulation analysis of various wealth tax designs and their effectiveness in achieving multiple post-growth policy goals.

Findings

Wealth taxes on net wealth are most effective for redistribution.

Taxes on financial and investment property wealth better address rent-seeking.

Trade-offs exist between different tax designs and policy goals.

Abstract

Wealth taxes are a frequently proposed policy within the post-growth literature, but evaluations of their alignment with post-growth goals, and empirical estimates of their potential effects, are lacking. We contribute to this literature by examining the extent to which different wealth-tax designs can contribute to four goals of a post-growth transition: redistributing wealth; eradicating extreme wealth; curbing rent-seeking; and reducing CO2 emissions. The analysis is based on microsimulation modelling, using household-level data from 18 countries of the 2017 EU Household Finance and Consumption Survey. Our analysis finds that taxes on net wealth are the most progressive and redistributive, while taxes on financial and investment property wealth tend to be more effective at addressing rent-seeking. However, we also identify trade-offs and conflicts between different tax designs and goals. As a result, a broader package of policies will be necessary to navigate these conflicts and mitigate the limitations inherent in any single wealth-tax design.