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Taxation and the External Wealth of Nations : Evidence from Bilateral Portfolio Holdings

Author

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  • Huizinga, Harry

    (Tilburg University, Center For Economic Research)

  • Todtenhaupt, Maximilian
  • Voget, Johannes

    (Tilburg University, Center For Economic Research)

  • Wagner, W.B.

    (Tilburg University, Center For Economic Research)

Abstract

This paper examines the impact of capital income taxation on the composition of foreign portfolio investment and on long-term external wealth. Using data on bilateral portfolio positions for a sample of 37 countries over the period 2001–2017, we find that capital gains and dividend taxation reduce the share of equities in foreign investments, while interest taxation increases this share. To examine the potential effects of capital income tax reform on long-term external wealth, we simulate tax reforms in which each country replaces its actual capital income tax rates by the average tax rates in the sample. We find that the external wealth effects of such reforms can be very substantial, with estimates ranging from +8.5% for Japan to −10% for New Zealand.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Huizinga, Harry & Todtenhaupt, Maximilian & Voget, Johannes & Wagner, W.B., 2019. "Taxation and the External Wealth of Nations : Evidence from Bilateral Portfolio Holdings," Discussion Paper 2019-029, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:98e2405a-8b3f-4c10-a47b-b09b7d52d976
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    File URL: https://pure.uvt.nl/ws/portalfiles/portal/31364296/2019_029.pdf
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    2. Ed-Dafali, Slimane & Patel, Ritesh & Iqbal, Najaf, 2023. "A bibliometric review of dividend policy literature," Research in International Business and Finance, Elsevier, vol. 65(C).

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    More about this item

    Keywords

    Asset allocation; capital income taxation; foreign portfolio investment;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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