Is the wealth tax harmful to economic growth?
Author
Summary, in English
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.
Department/s
Publishing year
2010
Language
English
Pages
19-34
Publication/Series
World Tax Journal
Volume
2
Issue
1
Document type
Journal article
Publisher
IBFD
Topic
- Economics
- Engineering and Technology
Keywords
- Wealth tax
- economic growth
- OECD countries
Status
Published
ISBN/ISSN/Other
- ISSN: 1878-4917