DP14054 Behavioral Responses to Wealth Taxes: Evidence from Switzerland
Author(s): | Marius Brülhart, Jonathan Gruber, Matthias Krapf, Kurt Schmidheiny |
Publication Date: | October 2019 |
Date Revised: | October 2019 |
Keyword(s): | Behavioral Responses, Switzerland, tax evasion, taxpayer mobility, Wealth Taxation |
JEL(s): | H24, H31, H73 |
Programme Areas: | Public Economics |
Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=14054 |
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.