Wealth and Property Taxation in the United States

Wealth data for the nineteenth-century United States barely exist, and this paper builds them from an unusual source: the paper trail of the General Property Tax, a levy that — unlike land taxes elsewhere — aspired to reach nearly all classes of property. The authors collect state-level assessment reports and decadal U.S. Census wealth data, use the Census’s own valuation work to construct assessment ratios that convert assessed values into market values, and produce annual state series from 1850 (earlier for some states) to 1935, decadal county series from 1850 to 1930, and national series aggregating the state figures. Three findings follow. First, the U.S. accumulated wealth extraordinarily fast after the Civil War: the wealth-to-GDP ratio moved from around 300% early in the century to 400% by 1860, collapsed to 200% during the Civil War, recovered to almost 500%, fell to 300% with World War I, and reached almost 600% on the eve of the Great Depression — movements driven by the numerator, wealth per capita, rather than by GDP. Second, spatial inequality has been large and highly persistent since the mid-1800s: dispersion of property per capita across states shows no decline, the top 10% richest counties held about 70% of total U.S. property by the end of the period, the county-level rank-rank correlation remains 0.67 over the full 60 years from 1870 to 1930, and convergence measured in wealth is markedly slower than the same calculation done on income data. Third, in county-level regressions with an extensive set of geographic, demographic and occupational controls, two initial conditions stand out as negatively associated with subsequent 60-year growth: a 10 percentage point higher share of enslaved property in 1860 is associated with 5 percent lower property growth over the following 60 years, and a 10 percentage point higher top-10% wealth share in 1870 with 20 percent lower growth — associations the paper reports as correlations, with slower growth in local literacy accounting for about 20% of the inequality–growth link.

Stefanie Stantcheva | Macro Paper Warehouse

Wealth and Property Taxation in the United States