A Wealth Tax on the Rich to Bring Down Public Debt? Revenue and Distributional Effects of a Capital Levy

24 Pages Posted: 25 Aug 2011  

Stefan Bach

German Institute for Economic Research (DIW Berlin)

Martin Beznoska

German Institute for Economic Research (DIW Berlin)

Viktor Steiner

German Institute for Economic Research (DIW Berlin)

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Date Written: August 2011

Abstract

The idea of higher wealth taxes to finance the mounting public debt in the wake of the financial crises is gaining ground in several OECD countries. We evaluate the revenue and distributional effects of a one-time capital levy on personal net wealth that is currently on the German political agenda. We use survey data from the German Socio-Economic Panel (SOEP) and estimate the net wealth distribution at the very top, based on publicly available information about very rich Germans. Since net wealth is strongly concentrated, the capital levy could raise substantial revenue, even if relatively high personal allowances are granted. We also analyze the compliance and administrative costs of the capital levy.

Keywords: capital levy, wealth distribution, microsimulation

JEL Classification: H24, D31, H22

Suggested Citation

Bach, Stefan and Beznoska, Martin and Steiner, Viktor, A Wealth Tax on the Rich to Bring Down Public Debt? Revenue and Distributional Effects of a Capital Levy (August 2011). Available at SSRN: https://ssrn.com/abstract=1916589 or http://dx.doi.org/10.2139/ssrn.1916589

Stefan Bach (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Martin Beznoska

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Viktor Steiner

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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