American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Wealth Tax Mobility and Tax Coordination
American Economic Journal: Applied Economics
vol. 17,
no. 1, January 2025
(pp. 402–30)
Abstract
We study the effects of decentralized wealth taxation on mobility and the effectiveness of tax coordination at mitigating tax competition. We exploit the reintroduction of the Spanish wealth tax, after which all regions except Madrid levied positive tax rates. We find the mobility responses to wealth taxes are within the range of prior estimates with respect to income taxes. However, wealth tax mobility responses generate losses to personal income tax revenues that are six times larger than the direct losses to wealth taxes. Madrid could achieve higher total regional revenues by agreeing to a harmonized positive tax rate.Citation
Agrawal, David R., Dirk Foremny, and Clara Martínez-Toledano. 2025. "Wealth Tax Mobility and Tax Coordination." American Economic Journal: Applied Economics, 17 (1): 402–30. DOI: 10.1257/app.20220615Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- H71 State and Local Taxation, Subsidies, and Revenue
- H73 State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
- H77 Intergovernmental Relations; Federalism; Secession
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