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Do Americans want to tax wealth? Evidence from online surveys

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  • Fisman, Raymond
  • Gladstone, Keith
  • Kuziemko, Ilyana
  • Naidu, Suresh

Abstract

A vast theoretical literature in public finance has studied the desirability of capital taxation. This discussion largely ignores the political feasibility of taxing wealth. We provide, to our knowledge, the first investigation of individuals' preferences over jointly taxing income and wealth. We provide subjects with a set of hypothetical individuals' incomes and wealth and elicit subjects' preferred (absolute) tax bill for each individual. Our method allows us to unobtrusively map both income earned and accumulated wealth into desired tax levels. Our regression results yield roughly linear desired tax rates on income of about 14%. Respondents' suggested tax rates indicate positive desired wealth taxation. When we distinguish between sources of wealth we find that, in line with recent theoretical arguments, subjects' implied tax rate on wealth is 3% when the source of wealth is inheritance, far higher than the 0.8% rate when wealth is from savings. Textual analysis of respondents' justifications for their tax rates imply limited concern for the elasticity of tax bases with respect to net-of-tax rates.

Suggested Citation

  • Fisman, Raymond & Gladstone, Keith & Kuziemko, Ilyana & Naidu, Suresh, 2020. "Do Americans want to tax wealth? Evidence from online surveys," Journal of Public Economics, Elsevier, vol. 188(C).
    • Handle: RePEc:eee:pubeco:v:188:y:2020:i:c:s0047272720300712
    DOI: 10.1016/j.jpubeco.2020.104207
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    More about this item

    Keywords

    Wealth tax; Optimal taxation; Tax preferences;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D6 - Microeconomics - - Welfare Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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