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A European Wealth Tax for a Fair and Green Recovery

Jakob Kapeller, Stuart Leitch and Rafael Wildauer ()
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Rafael Wildauer: University of Greenwich

No PKWP2119, Working Papers from Post Keynesian Economics Society (PKES)

Abstract: This paper investigates the potential of a European net wealth tax to raise substantial revenues while supporting the economy and the consensus on climate action. To achieve this, household survey data from the European Central Bank (covering 22 EU countries) are analysed. To address the problem of under-reporting of wealth at the top of the distribution in survey data, a Pareto distribution is fitted to the right tail of the data and used to create an amended data set which also represents these missing rich, whose wealth goes unreported. The Pareto-amended data show that household wealth is highly concentrated among the wealthiest households: the richest 1% hold 32% of total net wealth in the EU22 while the poorest half of all households only hold about 4.5% of total net wealth. These data are then used to estimate revenues for four different tax models. The results show that annual revenues between €192 billion (1.6% of GDP) and €1,281 billion (10.8% of GDP) across the EU22 are possible.

Keywords: progressive wealth taxation; thick tails; Pareto tails (search for similar items in EconPapers)
JEL-codes: H20 H30 (search for similar items in EconPapers)
Pages: 32
Date: 2021-11
New Economics Papers: this item is included in nep-env, nep-hme, nep-pbe and nep-pub
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Working Paper: A European wealth tax for a fair and green recovery (2021) Downloads
Working Paper: A European Wealth Tax for a Fair and Green Recovery (2021) Downloads
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