Working Paper: CEPR ID: DP17989
Authors: Samira Marti; Isabel Z. MartÃnez; Florian Scheuer
Abstract: Like in many other countries, wealth inequality has increased in Switzerland over the last fifty years. By providing new evidence on cantonal top wealth shares for each of the 26 cantons since 1969, we show that the overall trend masks striking differences across cantons, both in levels and trends. Combining this with variation in cantonal wealth taxes, we then estimate an event study model to identify the dynamic effects of reforms to top wealth tax rates on the subsequent evolution of wealth concentration. Our results imply that a reduction in the top marginal wealth tax rate by 0.1 percentage points increases the top 1% (0.1%) wealth share by 0.9 (1.2) percentage points five years after the reform. This suggests that wealth tax cuts over the last 50 years explain roughly 18% (25%) of the increase in wealth concentration among the top 1% (0.1%).
Keywords: Income and wealth inequality; Wealth taxation
JEL Codes: D3; E2; H2; H3; H7
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| reduction in the top marginal wealth tax rate by 0.1 percentage points (H29) | increase in the top 1% wealth share by approximately 0.9 to 1.2 percentage points (F62) |
| wealth tax cuts over the last 50 years (H24) | increase in wealth concentration among the top 1% and 0.1% (D31) |