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Department of Revenue report: wealth tax administrable but valuation, enforcement and revenue reliability pose challenges
Summary
DOR told the House Finance Committee it can administer a wealth tax if the legislature adopts clear valuation rules and provides enforcement resources, but international experience shows valuation of nonmarket assets, evasion and taxpayer mobility complicate reliable revenue estimation.
The Department of Revenue presented a staff report on wealth taxes, telling the House Finance Committee that while the agency believes it could administer a state-level wealth tax, such a tax would present significant valuation and enforcement challenges that affect compliance and revenue reliability.
Steve Ewing said the DOR review — required by proviso in the last operating budget — surveyed international experience and recent U.S. proposals and concluded the primary administrative challenges are (1) valuing nonmarketable assets, (2) preventing evasion and planning-driven avoidance, and (3) ensuring sufficient audit and enforcement capacity. The report noted many countries that levy wealth-like taxes rely on market valuations for publicly traded assets but employ formulaic or other methods for…
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