Working Paper: CEPR ID: DP15481
Authors: Florian Scheuer; Joel Slemrod
Abstract: This paper evaluates proposals for an annual wealth tax. While a dozen OECD countries levied wealth taxes in the recent past, now only three retain them, with only Switzerland raising a comparable fraction of revenue as recent proposals for a US wealth tax. Studies of these taxes sometimes, but not always, find a substantial behavioral response, including of saving, portfolio change, avoidance, and evasion, and the impact depends crucially on design features, especially the broadness of the base and enforcement provisions. Because the US proposals are very different from any previous wealth tax, experience in other countries offers only broad lessons, but we can gain insights from closely related taxes, such as the property and the estate tax, and from optimal tax analysis of the role of wealth taxation.
Keywords: wealth taxation; capital taxation; inequality
JEL Codes: H2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 1 percentage point decrease in wealth taxes in Switzerland (H29) | increases reported taxable wealth by at least 43% over six years (H29) |
| 1 percentage point reduction in the Danish wealth tax (H29) | raises taxable wealth by 21% after eight years (H29) |
| reintroduction of a wealth tax in Catalonia (H29) | substantial tax avoidance (H26) |
| wealth tax (H24) | reduces the after-tax return to saving (H23) |
| wealth tax (H24) | decreases capital accumulation (E22) |