The Wealth Tax of 1942 and the Disappearance of Non-Muslim Enterprises in Turkey

Seven Ağır and Cihan Artunç

The Journal of Economic History, 2019, vol. 79, issue 1, 201-243

Abstract: Turkey imposed a controversial tax on wealth to finance the army in 1942. This tax was arbitrarily assessed and fell disproportionately on non-Muslim minorities. We study the heterogeneous impact of this tax on firms by assembling a new dataset of all enterprises in Istanbul between 1926 and 1950. We find that the tax led to the liquidation of non-Muslim-owned firms, which were older and more productive, reduced the formation of new businesses with non-Muslim owners, and replaced them with frailer Muslim-owned startups. The tax helped “nationalize” the Turkish economy, but had negative implications for productivity and growth.

Date: 2019
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