Behavioral responses to wealth taxes: Evidence from Sweden

Abstract

This paper provides an empirical assessment of an annual wealth tax. Using Swedish administrative data, I estimate net- of-tax-rate elasticities of taxable wealth in the range [0.09, 0.27]. Cross- checking self- reported assets against asset data unavailable to the tax agency reveals that around a third of the elasticity estimates are due to underreporting of asset values. Difference- in-difference designs further suggest that the responses reflect evasion and avoidance rather than changes in saving.