Wealth tax

A wealth tax, also called a capital tax, equity tax, or net wealth tax, is a tax on an entity's holdings of assets or an entity's net worth. This includes the total value of personal assets, including cash, bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities, and personal trusts (a one-off levy on wealth is a capital levy). Typically, wealth taxation involves excluding an individual's liabilities, such as mortgages and other debts, from their total assets. Accordingly, this type of taxation is often referred to as a net wealth tax. As of 2017, five of the 36 OECD countries had a personal wealth tax (down from 12 in 1990). Proponents argue that wealth taxes can reduce income inequality by making it harder for individuals to accumulate large amounts of wealth. Wealth taxes have been criticized because they reduce economic growth, disincentivize entrepreneurship, encourage capital flight, and raise little revenue despite their high administrative costs.