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
(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