Wealth Tax

In contrast with the more familiar income tax, which is assessed on the money earned in a year—in other words, on the individual’s change in wealth—a wealth tax is assessed on the total value of the individual’s assets, including cash and savings, insurance and pension plans, housing, investments, securities, and other assets. Typically, [Page 1663]such a tax is a net wealth tax, insofar as liabilities like loans are deducted. Some wealth taxes take a percentage of the individual’s net wealth; others tax only net wealth over a certain threshold. The tax rate may be either flat or progressive. Property tax, which, despite the broader name, is levied on owned real estate, is sometimes considered a type of wealth tax—for most homeowners, their home represents the ...