In this video at: 1:51, Robert Reich, justifies Elizabeth Warren’s proposal for a federal Wealth Tax by claiming it is no different from cities imposing property taxes.
Property Tax is designed to pay the specific costs of maintaining a city. Current systems use assessments to determine how the total property tax is distributed to each land owner. The total tax collected, T, is the sum of each property’s assessment, Ai, times the tax rate, R. T = R*sum(Ai). If politicians were honest, the tax rate would be determined by dividing the amount of money needed, T, by the Total Assessment, sum(Ai). If the assessment process is applied uniformly, it does not matter what the assessment is, each person would end up paying the same share of the total.
With a wealth tax, there is no target amount of money that is trying to be collected. Rather it is proposed as a way to reduce wealth inequality. Thus the appraised value of assets will play an important role. The value of an asset depends solely on what others are willing to pay for it. Without a market for a certain class of assets, it is only opinion that can set a value. Technology or changes in tastes can markedly change the value of an asset. The bureaucracy needed to determine the value of each asset subject to a wealth tax will be vast, and the appeal process will be difficult and expensive.