Can Countries Justify Wealth Taxes?

Argentina passed, in December 2020, a one-time wealth tax to finance pandemic relief. 

The wealth tax is a progressive tax on global assets held by individuals with assets valued at more than ARS 200 million (about $2.5 million). Argentine assets valued between ARS 200 million to ARS 300 million are taxes at a 2% rate. The tax rate rises at 0.25% up to 3.5% for domestic assets worth over ARS 3 billion. Argentinians that hold assets abroad will be taxes at a range from 3% to 5.25%.   

The wealth tax will be collected in addition to the current annual personal asset tax, which already applies to total assets held by taxpayers valued over ARS 2 million. This tax – that exempts savings and term deposits in local branches – ranges from 0.5% for assets valued at ARS 2 million up to 1.25% for assets over ARS 18 million. Foreign assets held by Argentine are taxed at a rate up to 2.25%.

The main argument for taxing wealth is equity and the taxpayer ability of paying.  

However, high income individuals have access to sophisticated tax planning and have the capability to move away from a high tax jurisdiction. A no-tax or lower tax U.S. state or country will happily host high net worth individuals willing to bring in their residencies.  

Argentina, Buenos Aires