Capital levy
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Paisley humanitarian. "If I could only be quite sure that I shouldn't be discouraging him from saving."
"Mr. Asquith has pronounced himself cautiously in favour of a capital levy, on the condition, amongst others, that it must not be allowed to discourage the habit of saving." Cartoon from Punch magazine, February 11, 1920, illustrating part of the dilemma for governments pondering the use of a capital levy.
A capital levy is a tax on capital rather than income, and is collected once rather than annually. For example, a capital levy of 30% will see an individual or business with a net worth of $100,000 pay $30,000 in tax, regardless of income. It is considered difficult for a government to implement, as the confiscatory nature of taxation is more apparent than with income tax. Thus once such a levy is enacted, capital flight is likely to ensue.
Some economists argue that capital levies are a disincentive to savings and investment, though others argue that in theory this need not be the case.
[edit] References
The Capital Levy in Theory and Practice
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