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Does a progressive wealth tax reduce top wealth inequality? Evidence from Switzerland


Marti, Samira; Martínez, Isabel Z; Scheuer, Florian (2023). Does a progressive wealth tax reduce top wealth inequality? Evidence from Switzerland. Oxford Review of Economic Policy, 39(3):513-529.

Abstract

Like in many other countries, wealth inequality has increased in Switzerland over the last 50 years. By providing new evidence on cantonal top wealth shares for each of the 26 cantons since 1969, we show that the overall trend masks striking differences across cantons, both in levels and trends. Combining this with variation in cantonal wealth taxes, we then estimate an event study model to identify the dynamic effects of reforms to top wealth tax rates on the subsequent evolution of wealth concentration. Our results imply that a reduction in the top marginal wealth tax rate by 0.1 percentage points increases the top 1 per cent (0.1 per cent) wealth share by 0.9 (1.2) percentage points 5 years after the reform. This suggests that wealth tax cuts over the last 50 years explain roughly 18 per cent (25 per cent) of the increase in wealth concentration among the top 1 per cent (0.1 per cent).

Abstract

Like in many other countries, wealth inequality has increased in Switzerland over the last 50 years. By providing new evidence on cantonal top wealth shares for each of the 26 cantons since 1969, we show that the overall trend masks striking differences across cantons, both in levels and trends. Combining this with variation in cantonal wealth taxes, we then estimate an event study model to identify the dynamic effects of reforms to top wealth tax rates on the subsequent evolution of wealth concentration. Our results imply that a reduction in the top marginal wealth tax rate by 0.1 percentage points increases the top 1 per cent (0.1 per cent) wealth share by 0.9 (1.2) percentage points 5 years after the reform. This suggests that wealth tax cuts over the last 50 years explain roughly 18 per cent (25 per cent) of the increase in wealth concentration among the top 1 per cent (0.1 per cent).

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Economics and Econometrics
Physical Sciences > Management, Monitoring, Policy and Law
Uncontrolled Keywords:Management, monitoring, policy and law, economics and econometrics, income and wealth inequality, wealth taxation
Scope:Discipline-based scholarship (basic research)
Language:English
Date:18 August 2023
Deposited On:06 Feb 2024 12:55
Last Modified:30 Jun 2024 01:39
Publisher:Oxford University Press
ISSN:0266-903X
OA Status:Hybrid
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.1093/oxrep/grad025
Related URLs:https://www.zora.uzh.ch/id/eprint/255994/
Other Identification Number:merlin-id:24355
Project Information:
  • : FunderSNSF
  • : Grant ID176458
  • : Project TitleThe Influence of Taxation on Wealth and Income Inequality
  • : FunderH2020
  • : Grant ID757721
  • : Project TitleIneqPol - Inequality - Public Policy and Political Economy
  • Content: Published Version
  • Language: English
  • Licence: Creative Commons: Attribution 4.0 International (CC BY 4.0)