Though France canceled its wealth tax in 2018 in response to capital flight and revenue losses, and all but three European nations repealed their wealth taxes for similar reasons in the past decade, the idea remains a priority for American progressive policy officials, ATUF said.
“A wealth tax would face serious administrative and compliance challenges due to valuation difficulties and tax evasion and avoidance issues,” Huaqun Li, a senior economist at the Tax Foundation, said in a blog.
Li said earlier wealth tax proposals, including Warren’s, would have reduced GDP between 0.37% and 0.43%, in addition to having dramatic short-term effects, including doubling the trade deficit.
A wealth tax would also “induce foreign inflows of hundreds of billions of dollars a year to replace reductions in U.S. savings, which would cause international investors to replace home-grown billionaires as owners of capital,” Li said.