Wealth tax
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Because of the broad term "wealth", property tax, capital transfer taxes (inheritance tax, estate 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 governments 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, Switzerland 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 on January 2006, the wealth tax was abolished. In other countries, like Belgium or Great Britain, no tax of this type has ever existed.
[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.[2] 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.[3][4] 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. The wealth tax will be abolished in 2007.
- Switzerland: A progressive wealth tax with a maximum of around 1.5% may be levied on net assets.[5] 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.
[edit] See also
[edit] Notes
- ^ Tax/Spending Burden, Forbes, May 24, 2004
- ^ Annual national accounts - Base 2000, Institut National de la Statistique et des Etudes Economiques, 2000
- ^ Income tax 1992–2006 Sweden Statistics, Statistics Sweden, 2006
- ^ IMF NSDP, Fiscal Sector, General Government Operations
- ^ Switzerland Wealth Tax, Lowtax.net
