This is the Cato Daily Podcast for Thursday, February 14th, 2019. I'm

Caleb Brown. If you were going to tax wealth over and above taxing income, just how would you do it?

The answer isn't exactly straightforward.

Senator Elizabeth Warren of Massachusetts has proposed a tax on wealth, Cato's Michael Tanner

comments on the proposal. For anyone who's read

the Millionaire Next Door, the classic book on a study of millionaires and their habits,

and they go into this very sort of careful

distinction between income and wealth. That is you can earn a very high income and

retain none of it and or you can live modestly on a fairly reasonable income and save quite a bit of it.

And so when we think about taxes at least in the United States, we're almost universally talking about taxes on income.

Well, that's largely because the Constitution permits income taxes but does not permit direct taxes such as wealth

taxes. That's why there's no such thing as a federal property tax.

Yeah, so local government's tax property and and that is, in a sense, a tax on wealth.

But when people like Elizabeth Warren talks about taxing wealth, what do they mean?

Well, it's kind of up in the air exactly what they mean.

They may mean sort of a capital tax.

They may mean a tax on total wealth that an individual owns, which would of course have

constitutional problems.

But even a tax on wealth would have significant problems simply in defining what is wealth.

As you mentioned, most rich people, they're not relying on income per say, they're relying

on other forms of capital accumulation.

It might be their company, for example. Now if this is publicly traded stock you can make some sort of estimated value I guess of what the value of that is but what if it's a privately held company?

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