Behavioral responses to wealth taxes: Evidence from the Spanish Survey of Household Finances

Edison Jakurti and Bernd Süssmuth

Economics Letters, 2023, vol. 223, issue C

Abstract: This paper provides an empirical analysis of the re-introduction of the wealth tax in Spain. Using the Spanish Survey of Household Finance, we employ the difference-in-differences method to estimate the behavioral responses to the re-introduction of the wealth tax in 2011. Due to non-compliance, we are able to estimate the intention-to-treat effects which show that, over a six-year period, on average, the wealth tax reduced taxable wealth by about 42% to 51%. To distinguish between real and avoidance responses, we show evidence that part of this reduction could be attributed to portfolio composition shifts in favor of tax-exempt assets. These results could inform policy regarding both the potential of wealth taxation in reducing wealth concentration and inequality, and the loopholes that might undermine it.

Keywords: Wealth tax; Behavioral responses; Taxable wealth; Difference-in-differences; Spain (search for similar items in EconPapers)
JEL-codes: D31 H20 H31 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:223:y:2023:i:c:s0165176523000010

DOI: 10.1016/j.econlet.2023.110976

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