ABSTRACT
This chapter examines the general arguments advanced in favour of an annual tax on net wealth, then the problems to which it gives rise and its likely economic effects. A wealth tax is usually envisaged in principle as a tax levied annually on personal net assets (total assets minus liabilities) above a specified exemption limit. An annual wealth tax is a partial substitute for a capital gains tax. In so far as a capital gain adds to taxable wealth at assessment dates, it is subject to wealth tax in the same way as other additions to wealth. The theoretical arguments in favour of a wealth tax are attractive. But there is always a danger that in assessing a new tax we consider a blue-print, an ideal which never exists in practice. The efficiency arguments rest on the premise that the annual wealth tax is a partial substitute for income tax; that, in assessing its effects.
