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Distributional Effects of a Wealth Tax under Lifetime‐Dynastic Income Concepts

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  • Elin Halvorsen
  • Thor O. Thoresen

Abstract

Annual wealth tax is back on the policy agenda, but discussion of its effect is not well informed. When standard methodology is used and wealth‐tax burdens are measured against annual individual income, it is found that a large share of the tax burden falls on people with low incomes. In this study, we use rich Norwegian administrative data to discuss the distributional effects of wealth tax under several different income concepts, ultimately measuring income over the lifetime of family dynasties. When measured against lifetime income and lifetime income in dynasties, wealth tax is mostly borne by high‐income taxpayers and is seen as clearly redistributive.

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  • Elin Halvorsen & Thor O. Thoresen, 2021. "Distributional Effects of a Wealth Tax under Lifetime‐Dynastic Income Concepts," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(1), pages 184-215, January.
    • Handle: RePEc:bla:scandj:v:123:y:2021:i:1:p:184-215
    DOI: 10.1111/sjoe.12392
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    Cited by:

    1. Roberto Iacono & Bard Smedsvik, 2023. "Behavioral responses to wealth taxation: evidence from a Norwegian reform," Working Papers halshs-04423923, HAL.
    2. Bjørneby, Marie & Markussen, Simen & Røed, Knut, 2020. "Does the Wealth Tax Kill Jobs?," IZA Discussion Papers 13766, Institute of Labor Economics (IZA).
    3. Elin Halvorsen & Thor O. Thoresen, 2021. "Distributional Effects of a Wealth Tax under Lifetime‐Dynastic Income Concepts," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(1), pages 184-215, January.
    4. Matthias Krapf, 2018. "The Joint Distribution of Wealth and Income Risk: Evidence from Bern," CESifo Working Paper Series 7130, CESifo.
    5. David Gallusser & Matthias Krapf, 2022. "Joint Income-Wealth Inequality: Evidence from Lucerne Tax Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 163(1), pages 251-295, August.
    6. Marie Bjørneby & Simen Markussen & Knut Røed, 2023. "An imperfect wealth tax and employment in closely held firms," Economica, London School of Economics and Political Science, vol. 90(358), pages 557-583, April.
    7. Matthias Krapf, 2023. "Does Income Risk Affect the Wealth Distribution?," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 49(4), pages 475-515, October.
    8. Valeria Bonis & Luca Spataro, 2018. "Optimal income taxation and migration," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(4), pages 867-882, August.
    9. Kuypers, Sarah & Figari, Francesco & Verbist, Gerlinde, 2024. "Vertical and horizontal equity of wealth taxes: An assessment from a joint income-wealth perspective," Economics Letters, Elsevier, vol. 234(C).
    10. Ireen Choga & Fiyinfoluwa Giwa, 2023. "The Effect of Property Tax on Income Redistribution in Selected African Countries," Sustainability, MDPI, vol. 15(7), pages 1-15, March.
    11. David Gallusser & Matthias Krapf, 2019. "Joint Income-Wealth Inequality: An Application Using Administrative Tax Data," CESifo Working Paper Series 7876, CESifo.
    12. Spencer Bastani & Daniel Waldenström, 2023. "Taxing the wealthy: the choice between wealth and capital income taxation," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 39(3), pages 604-616.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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