In January this year, Senator Elizabeth Warren unveiled a proposal to tax the wealth of the richest 0.1 percent of Americans. The proposed legislation to tax households with a net worth of $50 million or more draws on analysis by Emmanuel Saez of the University of California, Berkeley showing that the richest 0.1 percent has seen its share of American wealth more than triple from 7 percent to 22 percent since the late 1970s. Saez and colleagues have also made calculations of the potential impact of Senator Warren’s proposed tax.

Chicago Booth’s Initiative on Global Markets invited its US panel—of which Saez is a member—to express views on three separate issues related to the wealth tax: first, how difficult it would be to enforce; second, assuming it could be enforced successfully, what would be its likely effects; and third, whether there were realistic alternatives within the existing US tax system.


A substantial majority of respondents considered the wealth tax to be much more difficult to enforce than existing federal taxes: weighted by each expert’s confidence in their response, 82 percent agreed with that statement, while just 9 percent disagreed.

Some of the experts pointed to past experiences of the challenges of enforcing a wealth tax. Steve Kaplan of Chicago Booth stated that, “Where they have been tried, wealth taxes have not been successful,” and Darrell Duffie at Stanford added, “The experience in France is apparently that this is a difficult form of tax to implement.”

Others who agreed with the statement commented on the difficulties of enforcement of wealth taxes compared with other taxes: Christopher Udry at Northwestern said they were “[m]uch more difficult than income taxes. The transition to appropriate reporting and record keeping for a wealth tax [is] difficult but feasible.” Larry Samuelson at Yale commented, “Wealth is notoriously difficult to tax. Enforcement problems are compounded by the distortions induced by legal tax evasion.” And Anil Kashyap at Chicago Booth pointed to the challenge of valuation: “Paintings, private businesses, long-held property without obvious comparables in multiple locations—all hard to value.”

Others were a little less skeptical, including two who answered that they were uncertain: Abhijit Banerjee at MIT asked, “It will be more difficult to implement, but much more? There will be a one-time investment in learning, closing loopholes,” and Jonathan Levin at Stanford noted, “It would be difficult, but other parts of the tax code are also very complex to enforce.” Judith Chevalier at Yale, who agreed with the statement, added: “There are challenges. Not clear that they would be greater than for the estate tax.”

Berkeley’s Saez and Aaron Edlin, both of whom disagreed with the statement, mentioned ways to make the wealth tax enforceable. Edlin commented on valuation issues: “One way to avoid under-reporting with some assets is to allow anyone to buy at declared valuations. Another is large penalties.” Saez referred to the resource requirements of tax collection: “Enforcement success depends on resources devoted to set up a systematic way to measure wealth: information sharing, norms for valuations etc.”


Weighted by each expert’s confidence in their response, just under three-quarters of the panel agreed that a successfully enforced wealth tax would substantially decrease the share of wealth going to the top 0.1 percent of wealth-holders.

Stanford’s Duffie wrote, “Conditional on successful enforcement, a simple calculation shows a substantial impact, assuming the revenues are redistributed naturally.”

Larry Samuelson of Yale calculated that “[i]f successful, taxation at rates of 2 or 3 percent, compounded over 20 years, would significantly diminish the taxed wealth,” and Saez noted, “Wealth tax mechanically reduces returns to wealth at the top. Behavioral responses [are] likely to magnify the effect. Effect builds up over time.”

Robert Shimer at the University of Chicago, who agreed with the statement, added, “It would also lead to much of the wealth moving offshore, despite provisions against that,” while Booth’s Kaplan, who strongly disagreed, argued, “Pre-tax wealth inequality is driven by technology and globalization. Wealth taxes do not change those two forces.”

Respondents who were uncertain about the impact returned to the condition of successful enforcement. Richard Thaler of Chicago Booth commented, “I don't know how we get to ‘successfully enforced.’ We can't collect the estate tax, why would we be able to enforce this?”


Weighted by each expert’s confidence in their response, 60 percent agreed that alternative means could achieve the objectives of a wealth tax.

Among those who agreed or strongly agreed with the statement, Michael Greenstone at the University of Chicago said that “a reform of existing taxes to match wealth tax, however, would need to do something about the stepping up of cost basis for estate taxes.” Thaler concurred—“Yes, the estate tax is a sieve. Start with that? Get rid of step up to begin with.”—as did Yale’s Judith Chevalier: “To use only income and capital gains taxes, a key policy lever would be eliminating the capital gains basis step up at death.”

Daron Acemoglu at MIT suggested, “What would be most successful would be a combination of relatively high estate taxes combined with taxes on capital income.” Acemoglu also noted, in response to the first statement of the poll, regarding enforceability, “Taxing capital income at the same rate as labor income would be simpler, more effective, and much less difficult to implement.”

Robert Hall at Stanford said, “We should focus on a progressive consumption tax structured as a value-added tax,” while William Nordhaus of Yale proposed, “Start with enforcing the current laws. This would be [a] highly progressive move and should be at [the] top of [the] tax agenda, way at [the] top.”

Among those who disagreed with alternative approaches, Saez commented, “Estate and realized capital gains taxes come decades after wealth accumulation . . . wealth tax is a useful withholding tax backstop,” while Udry concluded: “Unless the changes in capital gains and inheritance taxes were radical, they can't match the time path of the wealth tax.”

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