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Discussion Paper Details

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Title: Behavioral Responses to Wealth Taxes: Evidence from Switzerland

Author(s): Marius Brülhart, Jonathan Gruber, Matthias Krapf and Kurt Schmidheiny

Publication Date: October 2019

Keyword(s): Behavioral Responses, Switzerland, tax evasion, taxpayer mobility and Wealth Taxation

Programme Area(s): Public Economics

Abstract: We study how reported wealth responds to changes in wealth tax rates. Exploiting rich intra-national variation in Switzerland, the country with the highest revenue share of annual wealth taxation in the OECD, we find that a 1 percentage point drop in the wealth tax rate raises reported wealth by at least 43% after 6 years. Administrative tax records of two cantons with quasi-randomly assigned differential tax reforms suggest that 24% of the effect arise from taxpayer mobility and 20% from house price capitalization. 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.

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Bibliographic Reference

Brülhart, M, Gruber, J, Krapf, M and Schmidheiny, K. 2019. 'Behavioral Responses to Wealth Taxes: Evidence from Switzerland'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14054