Quite a bit.
For those who would like to know more, the Institute on Taxation and Economic Policy has issued a new report on The Geographic Distribution of Extreme Wealth in the U.S. Here are a few of the report’s key findings:
▶ More than one in four dollars of wealth in the U.S. is held by a tiny fraction of households with net worth over $30 million. Nationally, we estimate that wealth over $30 million per household will reach $26 trillion in 2022 with roughly one-fifth of that amount ($4.5 trillion) held by billionaires.
▶ A nationwide tax of 2 percent on wealth over $30 million could have raised nearly $415 billion if it were in effect this year, while a similar tax applying only to wealth in excess of $1 billion could have raised $62 billion. This tax would affect just 1 in 400 households nationwide, or 0.25 percent of the population. No state would see more than 0.5 percent of its population affected by such a tax.
▶ New York is home to the highest concentration of extreme wealth in the nation. Of all wealth over $30 million per household found in the U.S., more than 1 in 5 of those dollars can be found in New York. This finding points to the outsized importance of Wall Street as a source of extreme wealth in the U.S. and to the economic clout of New York City more broadly. (For more about the novel methodology behind this finding, see Appendix E.)
▶ Other states with an outsized concentration of extreme wealth achieve that distinction through a variety of means, including industry mix and the location decisions of a small number of billionaires. Other states with above-average shares of wealth in excess of $30 million are Arkansas, California, Connecticut, Florida, Hawaii, Illinois, Maryland, Massachusetts, Missouri, Nebraska, Nevada, Washington State, Wyoming and the District of Columbia.
▶ The Northeast is home to a higher concentration of extreme wealth than any other region and would therefore pay a significant share of a tax on wealth over $30 million per household. The Midwest and South would be least affected by such a tax as these regions possess smaller amounts of extreme wealth.
▶ A large share of extreme wealth is held in the form of unrealized capital gains, meaning investment income on which these families have yet to pay tax (and may never pay tax under current law). Nationally, among families with more than $30 million in wealth, an estimated 43 percent of that wealth takes the form of unrealized gains.
▶ Lawmakers could consider taxing the existing stock of unrealized capital gains either as part of a transition to taxing such gains on an annual basis or under a standalone, one-time tax. A one-time tax on the current stock of unrealized capital gains over $10 million per household could generate between $529 billion and $3.9 trillion depending on the parameters chosen for the tax.
▶ The federal government and states have no shortage of options for taxing extreme wealth, including net worth taxation, mark-to-market taxation, ending stepped-up basis, raising rates on realized capital gains and strengthening or creating estate and inheritance taxes. Notably, many options that the federal government might pursue in taxing extreme wealth would also be helpful to states seeking to diversify their own revenue streams to include extreme wealth within their tax bases.
H/T Francine Lipman
