A Wealth Tax By Professor Shakow

Another alternative method is the wealth tax. The wealth tax is an alternative to the estate and gift tax as well as the accession tax discussed earlier. The wealth tax is an annual valuation of property. This depends heavily on how accurate the valuations are. Professor Shakow introduced this method in her article, A Wealth Tax: Taxing the Estates of the Living. According to Shakow (2016) “The wealth tax described had two components. One was a flat tax on net worth. The other was a flat tax on wages.” (p. 951) Simply put the wealth tax would put a net worth tax on the total value of personal assets, corporate and individual income at a lower tax rate. In the past this alternative tax has been opposed heavily by Congress. Madoff (2016) “Congress

This section pertains more so for the accession tax which was discussed earlier in the research paper. This issues are important to reduce the wealth disparity and wealth inequality. The exemption for individuals to be taxed on the inheritance would be up to 20 million. This exemption is relatively high but it is intended to only affect “large” concentration of wealth and not affect the intermediate bodies that are hurt by the current estate tax. The second issue is the annual exclusions for gifts. Currently the annual exclusion is $14,000. This would stay intact and avoid taxation as well yearly reporting with an additional $100,000 for bequest received from a decedent’s will. Third, a changed would occur on taxes imposed on transfers. The transfer from the deceased to the spouse will remain tax free but taxes on close family members will be larger than those on distant relatives. The goal is to encourage a more diverse spread of wealth than they will otherwise choose. (Madoff, 2016, p. 889). The last four distinctions will affect trust, donations, family farms and businesses. The treatment of trust is a challenging one. Ideally the accession tax would come to effect at the moment that the trust interest is in the trustee’s power but what about non-general powers of appointment? Madoff (2016) states “One thing we know from the estate and gift tax world is that non-general powers of appointment can still confer great power on the holder.” (p. 890) An example of this could be if the deceased’s spouse has the power of appointment; this income would not be taxable and she has the power to distribute it properly as she wishes. Furthermore, when dealing with charitable donations the assertion tax would change the current