Advani, Arun and Tarrant, Hannah (2021) Behavioural responses to a wealth tax. Fiscal Studies, 42 (3-4). pp. 509-537. doi:10.1111/1475-5890.12283 ISSN 0143-5671.

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Abstract

In this paper, we review the existing empirical evidence on how individuals respond to the incentives created by a net wealth tax. Variation in the overall magnitude of behavioural responses is substantial: estimates of the elasticity of taxable wealth vary by a factor of 800. We explore three key reasons for this variation: tax design, context and methodology. We then discuss what is known about the importance of individual margins of response and how these interact with policy choices. Finally, we use our analysis to systematically narrow down and reconcile the range of elasticity estimates. We argue that a well-designed wealth tax would reduce the tax base by 7–17 per cent if levied at a tax rate of 1 per cent.

Item Type:	Journal Article
Subjects:	H Social Sciences > HG Finance H Social Sciences > HJ Public Finance H Social Sciences > HV Social pathology. Social and public welfare
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Wealth tax -- Great Britain, Finance, Personal -- Great Britain, Progressive taxation -- Great Britain, Tax evasion -- Great Britain
Journal or Publication Title:	Fiscal Studies
Publisher:	Wiley-Blackwell Publishing, Inc
ISSN:	0143-5671
Official Date:	October 2021
Dates:	Date Event October 2021 Published 25 October 2021 Available 11 August 2021 Accepted
Volume:	42
Number:	3-4
Page Range:	pp. 509-537
DOI:	10.1111/1475-5890.12283
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Open Access (Creative Commons)
Date of first compliant deposit:	25 August 2021
Date of first compliant Open Access:	29 October 2021
RIOXX Funder/Project Grant:	Project/Grant ID RIOXX Funder Name Funder ID ES/L011719/1 [ESRC] Economic and Social Research Council http://dx.doi.org/10.13039/501100000269 ES/V012657/1 [ESRC] Economic and Social Research Council http://dx.doi.org/10.13039/501100000269 AFSEE COVID-19 London School of Economics and Political Science http://dx.doi.org/10.13039/100011326
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