Wednesday , January 16 2019
Home / T. Cowen: Marginal Revolution / True but rarely mentioned: wealth taxes and discount rates

True but rarely mentioned: wealth taxes and discount rates

Summary:
…the value of wealth taxes depends sensitively on the interest rate…If the interest rate is 2%, then the tax rate is “only” 1/0.02 = 50%. If the interest rate is 5%, then the tax rate is 1/0.05 = 20%. I suspect these taxes were put in place in a time of higher interest ares and nobody is really thinking about the effect of lower rates. That is from John Cochrane, with other points of interest about tax incidence at the link. By the way, non-inflation-indexed capital gains are in part a wealth tax, so current higher interest rates are lowering the burden of that tax to some degree. The post True but rarely mentioned: wealth taxes and discount rates appeared first on Marginal REVOLUTION.

Topics:
Tyler Cowen considers the following as important:

This could be interesting, too:

Tyler Cowen writes Might there be a new eurozone-China recession?

David writes Still more wages in ND

David writes Brexit Choices Going Forward

David writes Student Brexit Poll

…the value of wealth taxes depends sensitively on the interest rate…If the interest rate is 2%, then the tax rate is “only” 1/0.02 = 50%. If the interest rate is 5%, then the tax rate is 1/0.05 = 20%. I suspect these taxes were put in place in a time of higher interest ares and nobody is really thinking about the effect of lower rates.

That is from John Cochrane, with other points of interest about tax incidence at the link.

By the way, non-inflation-indexed capital gains are in part a wealth tax, so current higher interest rates are lowering the burden of that tax to some degree.

The post True but rarely mentioned: wealth taxes and discount rates appeared first on Marginal REVOLUTION.

Tyler Cowen
Tyler Cowen is an American economist, academic, and writer. He occupies the Holbert C. Harris Chair of economics as a professor at George Mason University and is co-author, with Alex Tabarrok, of the popular economics blog Marginal Revolution. Cowen and Tabarrok have also ventured into online education by starting Marginal Revolution University. He currently writes the "Economic Scene" column for the New York Times, and he also writes for such publications as The New Republic, the Wall Street Journal, Forbes, Newsweek, and the Wilson Quarterly.

Leave a Reply

Your email address will not be published. Required fields are marked *