Unbiased

A US wealth tax would raise $250 billion a year, or $25 billion, depending on who is counting

Both camps want the largest American fortunes to pay more, so the argument over a yearly tax on net worth turns on a narrower question: whether such a tax can be valued, enforced, and collected at anything close to what its designers project.

11 min read2026-07-20

A yearly bill on wealth that was never sold

Net worth is what someone owns minus what they owe. An annual wealth tax charges a percentage of that figure every year, not of the income it produces. Senator Elizabeth Warren's Ultra-Millionaire Tax, the plan the current US debate is built on, would take 2 percent of the net worth above $50 million and an extra 1 percent above $1 billion, so the largest fortunes would owe 3 percent of their assets each year. Its designers, the Berkeley economists Emmanuel Saez and Gabriel Zucman, estimate it would fall on about 100,000 families and raise roughly $250 billion a year, near 1 percent of GDP, or $3 trillion over a decade.¹

Consider what that means for a founder who owns most of a company she has not sold. On paper she is worth $2 billion; in cash she holds almost none of it. A 2 percent levy on the slice above $50 million hands her a bill of nearly $40 million every year, payable in dollars, on a value no buyer has ever set. To send it, someone must first decide what her unlisted company is worth, then argue about how far to discount that figure because a minority stake in a private firm is hard to sell. Every serious objection to the tax, and every serious defense, begins in that gap between the paper value and the cash.

The debate is easy to miscast as a fight over whether the rich should pay more. Even the plan's sharpest critics grant the goal. Lawrence Summers and Natasha Sarin, who have done more than anyone to puncture its revenue estimates, write that they "share their objective that it is imperative to raise more tax revenue from those at the very top."² The concentration the tax targets is real and rising, and both camps say so. What they contest is the machinery: whether a yearly tax on net worth can be valued, enforced, and collected at anything close to what its designers project, whether it would dull saving and investment, and whether the Constitution even permits it. On one side stand the economists who built the plan and hold the enforcement problem solvable. On the other stand economists, an international tax body, and a Supreme Court that has reserved the question, who hold that it is not.

Emmanuel Saez and Gabriel Zucman, with the UK Wealth Tax Commission and a bloc of wealthy signatories

A well-designed annual tax on net worth can be valued and enforced, and it would raise hundreds of billions a year from fortunes that now pay a smaller share of their wealth than ordinary workers do.

Saez and Zucman put their revenue at $252 billion in the first year and about $3 trillion over 2023 to 2032, and they reach it only after assuming the wealthy dodge a large slice. Their model builds in a 15 percent reduction in liability "through a combination of tax evasion and tax avoidance," a response they themselves call "large in light of existing estimates."¹ In their peer-reviewed treatment for the Brookings Papers on Economic Activity, they set out "the key elements needed to make a U.S. wealth tax work in light of the experience of other countries": systematic third-party reporting of assets, few exemptions to game, and valuations prepopulated for the holdings that can be marked to market.³ Enforcement, on their account, is a design choice, and the countries that failed at it chose badly.

The case rests on a distribution they document at length. The top 0.1 percent's share of American wealth rose from about 7 percent in the late 1970s to roughly 20 percent, until those hundred-thousand-odd families own almost as much as the bottom 90 percent combined.¹ Because that wealth often throws off little taxed income, they argue, the very top now pays a smaller share of its net worth in taxes than everyone else: the wealthiest 0.1 percent an estimated 3.2 percent of their wealth, against 7.2 percent for the bottom 99 percent.¹ In The Triumph of Injustice they push the point to its sharpest form, calculating that in 2018 the 400 richest families paid a lower effective tax rate than steelworkers, schoolteachers, and retirees.⁴ A wealth tax, in their frame, restores a progressivity the income tax has lost.

They are not alone in judging the tax administrable. The UK Wealth Tax Commission, a panel of tax lawyers and economists that assembled the largest evidence base yet on the question, concluded that a wealth tax "would work and could raise" a quarter-trillion pounds over five years, meeting its own tests of revenue, efficiency, fairness, and resistance to avoidance.⁵ And the demand is not only academic. A group of wealthy Americans, among them Abigail Disney and members of the Pritzker and Soros families, publicly asked candidates to tax them, endorsing "two cents on the dollar" above $50 million and citing the same $3 trillion figure.⁶ Some of the people who would pay it say it can be done.

Emmanuel Saez and Gabriel Zucman (University of California, Berkeley), standing here because they designed the plan the debate is built on and produced the revenue estimate every other number is measured against.¹

Lawrence Summers and Natasha Sarin, Greg Mankiw, the OECD, and the Supreme Court's realization skeptics

A yearly tax on net worth cannot be valued or enforced well enough to raise what its designers claim, it taxes capital in a way that ends up falling on workers, and it may not be constitutional.

Summers and Sarin attack the number where it is built. Take the estate tax, they argue, which is already a wealth tax collected once at death: a 40 percent rate applied to the roughly 2 percent of the wealthy who die each year is the rough equivalent of a 0.8 percent annual wealth tax. Run the estate tax's actual yield through that equivalence and "a 2 percent wealth tax would raise a total of $25 billion," about an eighth of the Saez-Zucman estimate; even "being maximally optimistic" they reach only about $75 billion, some 40 percent of it.⁷ The wedge is avoidance. Where Saez and Zucman assume 15 percent, Summers and Sarin, applying the behavior the estate tax already reveals, find it "plausible that tax avoidance is closer to 60 percent," worked through "questionable appraisals; valuation discounts for illiquidity and lack of control," trusts, and charitable-remainder devices.² Official scorekeepers, they add, score a plan "in the form in which it would likely be enacted, not on the basis of the aspirations of their academic authors."²

Greg Mankiw presses a different objection: even collected perfectly, a tax on capital is a poor deal for the workers it is meant to help. In his two-class model, "because capital taxation reduces capital accumulation, labor productivity, and wages, it is not desirable even from the standpoint of workers who hold no capital."⁸ He also disputes the runaway-dynasty premise, calculating that consumption, inheritance split among heirs, and existing taxes already dilute great fortunes fast enough that the feared spiral would need capital to out-earn the economy by seven points a year, against an actual gap near two.⁸

The strongest evidence is a graveyard. Of the twelve OECD countries that levied annual wealth taxes in 1990, only four still did by 2017; the rest repealed them, in the OECD's words, over "efficiency and administrative concerns" and because the taxes "frequently failed to meet their redistributive goals."⁹ Austria, Denmark, Germany, Finland, and the Netherlands all walked away. The OECD's own verdict is that, alongside sound capital-income and inheritance taxes, "there are limited arguments for having a net wealth tax," which tends to be "more distortive and less equitable" because it bites at the same rate whether an asset earned 20 percent or nothing.⁹

Even the size of the prize is contested. A Treasury, Princeton, and Chicago team using administrative tax records puts top wealth shares below Saez and Zucman's, especially at the very peak the billionaire surtax relies on, though it agrees inequality is "high and has risen substantially over recent decades."¹⁰ A smaller base means less revenue before a single dollar is dodged. And the fairness statistic that animates the case is disputed on its own terms: Aparna Mathur of the American Enterprise Institute and Kyle Pomerleau, then of the Tax Foundation, argue the claim that billionaires pay less than workers holds only by excluding refundable credits from low earners' income, assigning the entire corporate tax to shareholders when official scorekeepers put a fifth to a quarter of it on workers, and overstating the sales taxes the poor pay.¹¹

Lawrence Summers and Natasha Sarin (Harvard University and the University of Pennsylvania), standing here because they produced the revenue critique both sides now argue over, from inside the camp that wants the top taxed harder.²

Why the two revenue estimates are really one argument about avoidance

The two headline numbers are close to the same calculation with one dial turned. Both camps start from a similar pool of top wealth and a similar statutory rate; the $250 billion and the $25 billion diverge mostly because one side assumes the wealthy will shield 15 percent of what they owe and the other assumes closer to 60 percent.¹² The founder from the opening is why that dial is a guess and not a measurement. No market sets the value of her company each year, so an appraiser does, and the same illiquidity that makes the asset hard to value makes the discount easy to argue down. The disagreement is not mainly about whether concentration is real or whether the rich should pay; both sides concede those. It is about administrability: whether the state can see and price net worth well enough to tax it at all. No official scorekeeper has ever settled it, because the Joint Committee on Taxation and the Congressional Budget Office never scored the Warren plan.

$250BSaez and Zucman, 15% avoidance

$25BSummers and Sarin, ~60% avoidance

The European record is the fact both sides reach for, and it genuinely serves both. To the skeptics, a dozen wealth taxes cut to four is proof the thing cannot be run.⁹ To the proponents, the same report says capital-income taxes "alone will most likely not be enough" to check wealth inequality and that a net wealth tax has "stronger arguments" where those other taxes are weak, which reads as evidence that the designs failed rather than the idea.⁹ The most uncomfortable data point for the proponents comes from their own allies. The UK Wealth Tax Commission, having judged a wealth tax workable, still concluded that an annual version is unworkable and preferred a one-time levy instead.

The allies' own limit

"An annual wealth tax is a non-starter in the UK and we should fix our existing taxes on wealth instead. However, a one-off wealth tax is a very different proposition."⁵ UK Wealth Tax Commission, Final Report (2020)

Beneath the revenue fight sits a forecast no one can yet check: whether taxing capital every year would meaningfully slow saving and investment, and whether that cost would land on workers as Mankiw predicts or stay small as the proponents assume.⁸ That is a claim about a counterfactual economy, and only a live US wealth tax run for years would test it.

The last thread may make the rest moot. A federal tax on net worth is not obviously constitutional: the Constitution requires "direct" taxes to be apportioned among the states by population, which a wealth tax cannot be, and the Sixteenth Amendment reaches only "incomes." In Moore v. United States the Supreme Court upheld a narrow tax in 2024 but pointedly reserved the larger question, noting that "a hypothetical unapportioned tax on an individual's holdings or property (for example, on one's wealth or net worth) might be considered a tax on property, not income," with two justices ready to require that income be realized before it can be taxed.¹² So the evidence that would move an undecided reader is unusually concrete, and none of it has arrived. A scored estimate from the Joint Committee on Taxation would narrow the revenue gap. A ruling in the line Moore opened would decide whether the tax is even available. And the measurement fight over how much wealth sits at the very top, where Saez and Zucman and their Treasury-Princeton-Chicago critics are still trading revisions, would move the number beneath both.¹⁰ Until one of them lands, the case for the tax and the case against it are arguing about a machine no one has built.

A yearly bill on wealth that was never sold

Emmanuel Saez and Gabriel Zucman, with the UK Wealth Tax Commission and a bloc of wealthy signatories

Lawrence Summers and Natasha Sarin, Greg Mankiw, the OECD, and the Supreme Court's realization skeptics

Why the two revenue estimates are really one argument about avoidance

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