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Some reactions to @DSMarkovits very interesting op-ed in the @nytimes. He proposes a one-time 5% tax on wealth in excess of $2.5m to help pay for fiscal measures prompted by the pandemic. It is very different from the Warren or Sanders wealth tax proposals.
@DSMarkovits is right that his proposed tax would be harder to evade because it's a one-time levy with a much lower exemption. It would hit upper middle class families that have fewer evasion opportunities.
But it would be harder to administer in some other ways. With an exemption of $2.5m, valuing personal residences is much more important than for a tax on the ultra wealthy.
There are some life cycle issues that need to be examined in a one-time wealth tax. A retired person with wealth of $3m is very differently situated than a 35yo with the same wealth.
As with all wealth tax proposals, it's hard to get a good estimate of revenue. Dan estimates a 5% tax on wealth in excess of 2.5m would raise roughly $2T. Saez and @gabriel_zucman taxjusticenow calculator projects only $1.6T even if you reduce tax evasion to zero.
And that doesn't account for the reduction in wealth over the last two months due to the pandemic.
The op-ed prompts an interesting tax design question. When would you measure wealth for the one-time levy? A retrospective tax (e.g. based on 12/2019 wealth) would be harder to evade, raise more revenue, but may be perceived as less fair.
A tax based on wealth measured during the pandemic (e.g., as of today) would raise less revenue but may be perceived as fairer. A tax based on end of year wealth would increase the possibility of evasion but perhaps raise more revenue if the economy has recovered by then.
