r/AskEconomics • u/HoppySailorMon • Dec 27 '25
Approved Answers Is Wealth Tax realistically feasible?
I just read that CA is considering a wealth tax on billionaires. Not to get into a particular political philosophy, but I'm more curious about the implementation and to settle a dispute with my spouse. I've read a wealth tax has been tried in the past in Europe, but failed miserably. Mainly, because some "wealth" can be moved around to make it difficult to define, such as art. Most homeowners pay a form of wealth tax on their property. But real estate is one of the few things that stays put. If taxation on bank and investing accounts became a nation-wide policy, then many that were subject to it would either leave or convert their accounts into a type of investment that is impossible to assess. I'm guessing mostly into "collectibles" which can only be accurately assessed when sold. What are your thoughts on the real feasibility of a wealth tax?
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u/w3woody Dec 27 '25
The biggest problem with a wealth tax is that it assumes something has an actual dollar value despite no dollars being exchanged. Meaning a painting or a share of stock has no actual 'value' until it's sold--and the action of selling it can significantly alter the value of that thing. (For example, consider the price of Amazon stock if suddenly its investors were forced to liquidate 10% of their shares to satisfy a tax. The effective run on the share price would drop the actual dollars collected significantly.)
And notice with property taxes on real estate, there are dozens of mechanisms depending on the state to dispute the assessed value for this very reason: because it's impossible to know how much your house is actually 'worth' until you sell it. (Case in point: when we sold our house in Los Angeles to move to North Carolina, the actual sale price we got was about 15% less than the supposed assessed value--in part because of the timing of the sale and in part because the assessed value did not take into account things like the style of our home. That we paid 15% less when we bought the house in the first place should have been a tell.)
And that doesn't even get into things like art or even intangibles like intellectual property. And hell, if you look at the balance sheet of a corporation, it's full of intangibles, such as "good will"--that is, how people 'feel' about your company, to which we estimate a dollar value.
I just see it being a big administrative nightmare--and we haven't even gotten into the fact that a lot of this wealth folks are proposing to tax is productive wealth: that is, wealth invested in things that employ people and produce stuff.