Wealth tax
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Because of the broad term "wealth", property tax, capital transfer taxes (inheritance tax, gift tax), endowment tax and capital gains taxes are sometimes referred to as "wealth taxes".
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[edit] Net worth tax
Some country's governments will require declaration of the tax payers balance sheet (assets and liabilities), and from that ask for a tax on net worth (assets minus liabilities), as a percentage of the net worth, or a percentage of the net worth exceeding a certain level. The tax is in place for both "natural" and in some cases legal "persons".
In France the net worth tax on "natural persons" is called the "solidarity tax on wealth". In other places the tax may be called, or known as, a "Capital Tax", an "Equity Tax", a "Net Worth Tax", a "Net Wealth Tax", or just a "Wealth Tax".
Most of the governments levying this net worth tax are big spenders with a relatively high government spending to GDP rate. And in no place where this kind of tax is in place does it contribute to more than 0.3% of the total tax intake ([1]). It is therefore seen by some people as a statement of philosophy more than a considerable revenue base for the government.
Within the European Union, only France, Spain, Greece, Luxembourg, and Sweden, impose a wealth tax, although often with lower rates and higher thresholds of imposition than in France. European countries that have abandoned any tax of this type in the past five years (since 2003) are Austria, Denmark, the Netherlands, and Germany. In Finland, starting 2006-01-01 the wealth tax has been abolished. In other countries, like Belgium or Great Britain, no tax of this type has ever existed.
With the removal of the estate tax in the United States planned for 2010, some governmental analysts are proposing an annual one percent net worth tax for people with a net worth over 100 million dollars.
Since the Reagan administration began in 1981, the net worth of wealthy individuals in many instances have doubled or tripled, even when adjusted for inflation. The gap between the wealthy and the poor in the United States has increased to the greatest level since the 1890's.
[edit] Existing net worth taxes
- France. In 2003 out of €786 billion "general government" receipts, €174 billion was collected on "income and wealth". No further breakout is disclosed. Data is from the Institut National de la Statistique et des Etudes Economiques. See separate article solidarity tax on wealth.
- Sweden. In 2003 out of a 1,314 billion kronor "general government" revenue, 3.818 billion kronor of "wealth tax" was collected. Data is from Statistics Sweden and the IMF NSDP, Fiscal Sector, General Government Operations. The tax rate is 1.5% the net worth exceeding 1,500,000 kronor (single person, estate of deceased person (dödsbo), Non-profit institutions serving households (familjestiftelse)), or 2,000,000 kronor (married). And 0.15% on the net worth exceeding 25,000 kronor for any other legal person. ([2]) (2002)
- Switzerland. A progressive wealth tax with a maximum of around 1% may be levied on net assets. The exact amount varies between cantons.
[edit] Property tax
In the United States, property taxes are annual taxes (about 1 to 2% of market value per year), assessed locally, to pay for local schools and services. Local jurisdictions rely upon property taxes (and other asset taxes such as taxes on capital or inventories) because most physical assets cannot be easily moved out of the jurisdiction, whereas paper wealth, income, etc. is easily moved to other localities.
Over time, the property taxes add up significantly, such that over a generation of 25 years, a family may pay, with annual increases for inflation, up to 50% of a property's market value in taxes. Heavy property taxation or severe increases in appraised valuations are major causes of local political unrest in localities throughout the United States; see California's Proposition 13.
Because property taxes have been seen as unfair taxes (other assets such as CD's, equities, or partnerships are taxed rarely, if at all), some properties, such as certain farms or forest land, may have reduced valuations. Non-profit and government owned properties are often exempt.
