In Italy it is time to decide how to tax wealth, not if to tax wealth. So it has been decided and so it will. Smart thing? Well before answering, we should answer first a few questions:
a) What are we to do with the amount of money raised through a wealth tax? Reduce debt? Bad idea, Italy does not have a high level of debt , it has low level of growth. Reduce other taxes? Which ones? Increase public expenditure by the same amount? Now this is a good idea. Italy badly needs a demand boost AND an increase in its core infrastructure for social services: hospitals falling apart, public schools, landscapes etc. It would need to monitor that this money is well spent, so you will need more than simply spending: monitoring quality and prices of procurement will become essential.
b) Must we really tax more to finance this expenditure? Can’t we save on wasteful expenditure (a transfer that is, from taxpayers to collusive and/or corrupt firms) to finance this new productive expenditure? Sure we can.
c) So why tax wealth and not cut expenditure? Because it is politically harder, we know. But it is these hard choices and not the easy way out that we await from the new government.