Friday, October 28, 2022

What happens when you reduce a wealth tax?

 Evidence from Switzerland:

...1 percentage point drop in a canton's wealth tax rate raises reported taxable wealth by at least 43% after 6 years.  
Wealth reported to the government goes up because: 
  • Less tax evasion as the benefits of evading the wealth tax decrease (Ch03); 
  • Wealthy people migrate to lower-tax areas (Ch02); and 
  • House prices rise, increasing wealth, as the benefit of living in a lower-tax area increase housing demand (Ch09).
BOTTOM LINE:  markets discipline governments.

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