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Is the wealth tax harmful to economic growth?

Hansson, Åsa LU (2010) In World Tax Journal 2(1). p.19-34
Abstract
After abolishing the wealth tax in a number of European countries during recent decades, increasing income and wealth inequality have spurred the discussion of reintroducing a wealth tax in a number of countries. This has refuelled the heated discussion in the popular press about the wealth tax’s merits and harmful effects. The academic community has been considerably quieter on the merits and disadvantages of the wealth tax, however. This paper attempts to fill this gap by empirically estimating the relationship between the wealth tax and economic growth in 20 OECD countries over the time period 1980-1999. Using an instrumental-variable approach and “differenced” data to control for two types of endogeneity, I find fairly robust support... (More)
After abolishing the wealth tax in a number of European countries during recent decades, increasing income and wealth inequality have spurred the discussion of reintroducing a wealth tax in a number of countries. This has refuelled the heated discussion in the popular press about the wealth tax’s merits and harmful effects. The academic community has been considerably quieter on the merits and disadvantages of the wealth tax, however. This paper attempts to fill this gap by empirically estimating the relationship between the wealth tax and economic growth in 20 OECD countries over the time period 1980-1999. Using an instrumental-variable approach and “differenced” data to control for two types of endogeneity, I find fairly robust support for the popular contention that wealth taxes dampen economic growth. The estimated magnitude, however, is somewhat less alarming than popular account. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Wealth tax, economic growth, OECD countries
in
World Tax Journal
volume
2
issue
1
pages
19 - 34
publisher
International Bureau of Fiscal Documentation IBFD
ISSN
1878-4917
language
English
LU publication?
yes
id
7c168774-6b04-4e95-9adb-5fc59bbea87f (old id 1591267)
date added to LUP
2010-04-29 13:15:02
date last changed
2018-05-29 11:03:10
@article{7c168774-6b04-4e95-9adb-5fc59bbea87f,
  abstract     = {After abolishing the wealth tax in a number of European countries during recent decades, increasing income and wealth inequality have spurred the discussion of reintroducing a wealth tax in a number of countries. This has refuelled the heated discussion in the popular press about the wealth tax’s merits and harmful effects. The academic community has been considerably quieter on the merits and disadvantages of the wealth tax, however. This paper attempts to fill this gap by empirically estimating the relationship between the wealth tax and economic growth in 20 OECD countries over the time period 1980-1999. Using an instrumental-variable approach and “differenced” data to control for two types of endogeneity, I find fairly robust support for the popular contention that wealth taxes dampen economic growth. The estimated magnitude, however, is somewhat less alarming than popular account.},
  author       = {Hansson, Åsa},
  issn         = {1878-4917},
  keyword      = {Wealth tax,economic growth,OECD countries},
  language     = {eng},
  number       = {1},
  pages        = {19--34},
  publisher    = {International Bureau of Fiscal Documentation IBFD},
  series       = {World Tax Journal},
  title        = {Is the wealth tax harmful to economic growth?},
  volume       = {2},
  year         = {2010},
}