This report examines and assesses the current and historical use of net wealth taxes, defined as recurrent taxes on individual net assets, in OECD countries. It provides background on the use of wealth taxes over time in OECD countries as well as on trends in income and wealth inequality. It then assesses the case for and against the use of a net wealth tax to raise revenues and reduce inequality, based on efficiency, equity and tax administration considerations. The effects of personal capital income taxes and taxes on wealth transfers are also discussed to understand how these taxes interact with net wealth taxes. Finally, the report looks at practical tax design issues and shows that the way a net wealth tax is designed can have a significant impact on the effectiveness and fairness of the tax. The report concludes with a number of practical tax policy recommendations regarding net wealth taxes.

This report was produced by the Tax Policy and Statistics Division of the OECD Centre for Tax Policy and Administration with the financial support of the Korea Institute of Public Finance (KIPF).

Net wealth taxes are far less widespread than they used to be in the OECD but there has recently been a renewed interest in wealth taxation. While 12 countries had net wealth taxes in 1990, there were only four OECD countries that still levied recurrent taxes on individuals’ net wealth in 2017. Decisions to repeal net wealth taxes have often been justified by efficiency and administrative concerns and by the observation that net wealth taxes have frequently failed to meet their redistributive goals. The revenues collected from net wealth taxes have also, with a few exceptions, been very low. More recently, however, some countries have shown a renewed interest in net wealth taxes as a way to raise revenues and address wealth inequality.

This chapter provides an overview of individual net wealth taxes in OECD countries. It looks at how the number of countries levying a net wealth tax has evolved over time. It also examines trends in the revenues that have been collected from net wealth taxes since the mid-1960s.

This chapter provides a brief overview of trends in the distribution of income and wealth in OECD countries. The chapter starts by looking at income inequality trends before examining trends in the distribution of wealth and patterns in the composition of assets across the wealth distribution.

This chapter reviews the arguments for and against individual net wealth taxes. These arguments relate to the efficiency, equity and administrative implications of net wealth taxes. The effects of capital income taxes and taxes on wealth transfers are also discussed to examine how these taxes interact with net wealth taxes and whether they can be complements or substitutes to taxes on net wealth.

This chapter examines practical tax design issues in countries that currently tax or have previously taxed individual net wealth. It largely draws upon countries’ responses to the OECD Net Wealth Tax Questionnaire. This chapter highlights the differences in the ways that countries have implemented net wealth taxes in practice and identifies a number of good policy practices in the design of net wealth taxes.

This chapter highlights the main conclusions of the report regarding the role of the tax system in addressing wealth inequality and whether a net wealth tax is the most appropriate instrument to achieve that objective. It also provides a number of practical tax design recommendations for countries that already have or wish to implement net wealth taxes.

This questionnaire aims to collect information on the design of net wealth taxes as well as on their rationale and effects. Replies to the questionnaire will be used as input to the OECD Secretariat’s report on Net Wealth Taxes in OECD Countries.