Standard economic theories of asset markets assume that assets are valued entirely for the consumption streams they can finance. This paper examines the introduction of the demand for status (as a function of wealth) into a model of uninsurable idiosyncratic risk—the “spirit of capitalism” (“soc”) assumption. We find that soc preferences lead to less inequality in wealth; placing wealth into th...

This paper makes two contributions to the literature on the effects of wealth on health. First, it deals with reverse causality and omitted variable bias by exploiting exogenous variation in inherited wealth generated by the repeal of the Swedish inheritance tax. Second, it analyzes responses in health outcomes through the use of administrative registers. The results show that increased wealth ...

Differential property tax policy for farmland is often set under conditions of uncertainty and limited information regarding landowners’ objective functions. This study examines optimal differential tax policy for a parcel of agricultural land facing uncertain development, identifying instances in which common farmland taxation policies may be non-optimal. Optimal tax rates are characterized gi...

This paper analyzes the effects of differential tax treatment of corporate and non-corporate income in the U.S. on capital accumulation, the allocation of resources across sectors, entrepreneurship, and the distribution of wealth. I develop an entrepreneurial choice model with two important frictions, financial constraints and uninsurable business risk, that is broadly consistent with empirical...

This paper addresses the behavioral effects of an annual wealth tax. I use Swedish tax records over the period 2000-2006 to estimate bunching at kink points in the progressive tax schedule and find significant estimates of the implied elasticity of taxable net wealth in the range [0.1, 0.3]. I decompose the effects into a reporting response and a real saving response. Using asset-level data on ...

One of the most important economic topics in every country is considering tax issues as a way of increasing the government's income through attracting public confidence by observing the principles of proceeding in the tax system of the country which might likely cause a national production boom, increase economic growth rate, reduce unemployment and the fair distribution of wealth. In this rega...

This paper investigates the importance of entrepreneurship when quantifying the aggregate and distributional effects of switching from a progressive to a proportional income tax system. I find that the distributional consequences of the tax reform in a model economy with entrepreneurs contrast markedly from those in a model economy with no entrepreneurs. The elimination of progressive taxation ...

There is an ongoing debate about whether inheritance and estate taxes are effective in raising revenues and in contributing to a more equal society. The different views on transfer taxes are largely dependent on beliefs about whether people plan their wealth to avoid these taxes. In this paper, we follow Kopczuk (2007) and study people’s planning response to the onset of terminal illness. An ex...

Abstract In this paper, we model the revenue that could be raised from an annual and a one‐off wealth tax of design recommended by Advani, Chamberlain Summers in Wealth Tax Commission's Final Report (2020). We examine distributional effects tax, terms both other characteristics. also estimate share taxpayers who would face liquidity constraints meeting their liability. find charging 0.17 per ce...

Taxes have major costs beyond the collected revenue: deadweight from distorted incentives, compliance and enforcement costs, etc. A simple market mechanism, the Equity Tax, avoids these problems for the trickiest cases: corporate, dividend, and capital gains taxes. It exploits the ability of the share prices to reflect the expected true annual return (as perceived by investors, not as defined b...