Many studies have shown that wealth inequality is even greater than income inequality and has increased in recent decades. This occurs in part because personal wealth is much more unequally distributed than income, and many households do not have any (or even negative) wealth. In the absence of capital taxation, wealth concentration tends to increase and self-reinforce, since the top richest can save more, diversify investments, and transfer wealth through untaxed inheritances. Even in the current global scenario of growing inequality, net wealth taxes are far less widespread than they used to be. While 12 countries in Europe had net wealth taxes in 1990, only Norway, Switzerland and Spain still have a broad-based wealth tax. Three South American countries also levy wealth taxes: Argentina, Uruguay and Colombia. The main justification for the abolishment of net wealth taxes during the 1990s was their high administrative costs versus low revenue collection. However, studies have shown that their tax design failed to reach the top richest people, proposing more progressive wealth taxation and third-party reporting to curb tax evasion. More recently, some countries have been discussing the (re)introduction of net wealth taxes to raise revenues and reduce wealth inequality, especially in light of the COVID-19 pandemic, which has greatly exacerbated these indicators.

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