Behavioral Responses to Wealth Taxes: Evidence from Switzerland

65 Pages Posted: 31 Oct 2019

See all articles by Marius Brülhart

Marius Brülhart

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne)

Jonathan Gruber

Massachusetts Institute of Technology (MIT) - Department of Economics

Matthias Krapf

University of Lausanne

Kurt Schmidheiny

Universität Basel

Multiple version iconThere are 2 versions of this paper

Date Written: 2019

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.

Keywords: wealth taxation, behavioral responses, taxpayer mobility, evasion, Switzerland

JEL Classification: H240, H310, H730

Suggested Citation

Brulhart, Marius and Gruber, Jonathan and Krapf, Matthias and Schmidheiny, Kurt, Behavioral Responses to Wealth Taxes: Evidence from Switzerland (2019). CESifo Working Paper No. 7908. Available at SSRN: https://ssrn.com/abstract=3477721

Marius Brulhart (Contact Author)

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne) ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland
+41 21 692 3471 (Phone)
+41 21 692 3365 (Fax)

HOME PAGE: http://www.hec.unil.ch/mbrulhar/

Jonathan Gruber

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-391
Cambridge, MA 02142
United States

Matthias Krapf

University of Lausanne ( email )

Quartier Chambronne
Lausanne, Vaud CH-1015
Switzerland

Kurt Schmidheiny

Universität Basel ( email )

Wirtschaftswissenschaftliche Fakultät
Peter Merian-Weg 6
Basel, CH-4002
Switzerland

HOME PAGE: http://wwz.unibas.ch/schmidheiny/

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