Senator Elizabeth Warren’s proposed wealth tax is a more promising idea, I think, than Alexandria Ocasio-Cortez’s plan for a top marginal income-tax rate of 70 percent. A levy that high on very high incomes is likely to be fiscally self-defeating, but an annual 2-3 percent tax on wealth would be a big revenue-raiser even if confined to the very rich. This isn’t enough by itself to make it a good idea, but at least Warren’s proposal is fiscally productive.
The U.S. already has various wealth taxes that go by other names, but they work badly. Federal taxes on income from capital — in the form of profits, dividends and capital gains — and taxes on inheritance are varieties of wealth tax. Many state and local governments tax houses and other property as well.
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