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The costs of administering a wealth tax

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  • Burgherr, David

Abstract

I assess the costs of administering a wealth tax for taxpayers and the tax authority in the UK context, based on evidence from existing UK taxes on wealth and comprehensive wealth taxes that have been imposed in other countries. My central estimate is that a well-designed wealth tax generates costs to taxpayers of 0.1 per cent of taxable wealth and costs to the tax authority of 0.05 per cent of taxable wealth. I discuss how these costs depend on design choices. My findings can inform revenue modelling and help to evaluate the desirability of wealth taxes.

Suggested Citation

  • Burgherr, David, 2021. "The costs of administering a wealth tax," LSE Research Online Documents on Economics 110715, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:110715
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    1. Arun Advani & Hannah Tarrant, 2021. "Behavioural responses to a wealth tax," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 509-537, September.
    2. Florian Scheuer & Joel Slemrod, 2021. "Taxing Our Wealth," Journal of Economic Perspectives, American Economic Association, vol. 35(1), pages 207-230, Winter.
    3. Marius Brülhart & Jonathan Gruber & Matthias Krapf & Kurt Schmidheiny, 2022. "Behavioral Responses to Wealth Taxes: Evidence from Switzerland," American Economic Journal: Economic Policy, American Economic Association, vol. 14(4), pages 111-150, November.
    4. Arun Advani & Helen Hughson & Hannah Tarrant, 2021. "Revenue and distributional modelling for a UK wealth tax," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 699-736, September.
    5. Arun Advani & William Elming & Jonathan Shaw, 2023. "The Dynamic Effects of Tax Audits," The Review of Economics and Statistics, MIT Press, vol. 105(3), pages 545-561, May.
    6. Marius Brülhart & Jonathan Gruber & Matthias Krapf & Kurt Schmidheiny, 2016. "Taxing Wealth: Evidence from Switzerland," CESifo Working Paper Series 5966, CESifo.
    7. Rosemary Marcuss & George Contos & John Guyton & Patrick Langetieg & Allen Lerman & Susan Nelson & Brenda Schafer & Melissa Vigil, 2013. "Income Taxes and Compliance Costs: How Are They Related?," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(4), pages 833-854, December.
    8. Sandford, Cedric & Morrissey, Oliver, 1985. "The Irish Wealth Tax: A Case Study in Economics and Politics," Research Series, Economic and Social Research Institute (ESRI), number GRS123.
    9. Summers, Andrew, 2021. "Ways of taxing wealth: alternatives and interactions," LSE Research Online Documents on Economics 111867, London School of Economics and Political Science, LSE Library.
    10. Emma Chamberlain, 2021. "Who should pay a wealth tax? Some design issues," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 599-613, September.
    11. Glucksberg, Luna & Burrows, Roger, 2016. "Family offices and the contemporary infrastructures of dynastic wealth," LSE Research Online Documents on Economics 75899, London School of Economics and Political Science, LSE Library.
    12. Stefan Bach & Martin Beznoska & Viktor Steiner, 2014. "A Wealth Tax on the Rich to Bring Down Public Debt? Revenue and Distributional Effects of a Capital Levy in Germany," Fiscal Studies, Institute for Fiscal Studies, vol. 35, pages 67-89, March.
    13. Andy Summers, 2021. "Ways of taxing wealth: alternatives and interactions," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 485-507, September.
    14. Chamberlain, Emma, 2021. "Who should pay a wealth tax? Some design issues," LSE Research Online Documents on Economics 111925, London School of Economics and Political Science, LSE Library.
    15. Spengel, Christoph & Evers, Lisa & Evers, Maria Theresia & Scheuering, Uwe & Streif, Frank, 2013. "Die Folgen von Substanzsteuern für Familienunternehmen, Staat und Gesellschaft," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 110567.
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    Cited by:

    1. Arun Advani & Helen Hughson & Hannah Tarrant, 2021. "Revenue and distributional modelling for a UK wealth tax," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 699-736, September.
    2. Stephen Daly & Helen Hughson & Glen Loutzenhiser, 2021. "Valuation for the purposes of a wealth tax," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 615-650, September.
    3. Arun Advani & Helen Miller & Andy Summers, 2021. "Taxes on wealth: time for another look?," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 389-395, September.
    4. Dominik Bernhofer & Michael Ertl & Katharina Bohnenberger & Franziska Disslbacher & Julia Hofmann & Petra Innreiter & Markus Marterbauer & Patrick Mokre & Matthias Schnetzer, 2022. "Tax me if you can. Potenziale moderner Vermögensbesteuerung in Österreich," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 48(2), pages 207-230.

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    More about this item

    Keywords

    administrative costs; tax administration; tax compliance; tax enforcement; wealth tax;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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