A Kaleckian wealth tax to support a Green New Deal

Abstract

Green New Deals are being widely discussed as both a means to confront climate change and to improve aspects of social well-being. An important facet of the discussion is how they should be financed. The negative impacts of Covid-19 on national budgets and sovereign debt question whether the implementation of Green New Deals is feasible if austerity needs to be introduced to achieve sustainability. This article assesses whether a wealth tax based upon the work of Michal Kalecki could help avoid austerity measures and facilitate the introduction of Green New Deals. While wealth taxes have traditionally been defined on net worth or assets to reduce wealth inequality, the formulation is meant to be equitable by applying to gross wealth or assets. Estimates are calculated for the United States and turn out to be quite modest. The approach not only generates revenue to cover expected net interest outlays on national debt, but additional revenue to pay down portions of it and/or support green initiatives, such as Biden’s de-carbonisation policy. The article concludes with a discussion of challenges for the tax’s effectiveness.