The Wealth Tax and the Tax Mix

The objective of this paper is to study the role of wealth taxes as a component of the overall tax mix. In particular, wealth taxes are one of many potential taxes that apply to assets and asset income, so the question is whether wealth taxes should substitute, complement, or neither other taxes on assets and their income. More specifically, our purpose is to consider how well the Canadian tax system fares in taxing asset income, asset wealth and asset transfers with aview to judging whether wealth taxation would be a useful adjunct to the existing system. Despite the advantages that wealth taxation has compared to the existing capital tax system, we suggest that rather than incurring the administrative costs of introducing a wealth tax, a more satisfactory approach would be to reform the tax treatment of capital income and inheritances instead