American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Behavioral Responses to Wealth Taxes: Evidence from Switzerland
American Economic Journal: Economic Policy
vol. 14,
no. 4, November 2022
(pp. 111–50)
Abstract
We study how declared wealth responds to changes in wealth tax rates. Exploiting rich intranational variation in Switzerland, we find a 1 percentage point drop in a canton's wealth tax rate raises reported taxable wealth by at least 43 percent after 6 years. Administrative tax records of two cantons with quasi-randomly assigned differential tax reforms suggest that 24 percent of the effect arises from taxpayer mobility and 21 percent from a concurrent rise in housing prices. Savings responses appear unable to explain more than a small fraction of the remainder, suggesting sizable evasion responses in this setting with no third-party reporting of financial wealth.Citation
Brülhart, Marius, Jonathan Gruber, Matthias Krapf, and Kurt Schmidheiny. 2022. "Behavioral Responses to Wealth Taxes: Evidence from Switzerland." American Economic Journal: Economic Policy 14 (4): 111–50. DOI: 10.1257/pol.20200258Additional Materials
JEL Classification
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- H26 Tax Evasion and Avoidance
- H31 Fiscal Policies and Behavior of Economic Agents: Household