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Scenarios and Distributional Implications of a Household Wealth Tax in Ireland

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  • Lawless, Martina
  • Lynch, Donal

Abstract

This paper uses recently available information on the composition of household assets and liabilities to examine the impact of a tax on household wealth in Ireland under a wide range of assumptions on how such a tax might be designed. We compare results based on models of existing taxes on household wealth across Europe and a number of hypothetical scenarios to illustrate how the results are affected by varying qualifying thresholds or asset exemptions. We present revenue estimates and calculations for the percentage of households that would be liable for different qualifying thresholds, tax rates and exemptions for specific assets, such as the household main residence and farms. For each scenario, we further examine characteristics of affected households in terms of their income decile and demographic characteristics. Due to the imperfect correlation between income and wealth, we find that in almost every scenario, a non-negligible proportion of the tax would be collected from households in the lowest income deciles.

Suggested Citation

  • Lawless, Martina & Lynch, Donal, 2016. "Scenarios and Distributional Implications of a Household Wealth Tax in Ireland," Papers WP549, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:wp549
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    References listed on IDEAS

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    1. Marius Brülhart & Jonathan Gruber & Matthias Krapf & Kurt Schmidheiny, 2016. "Taxing Wealth: Evidence from Switzerland," NBER Working Papers 22376, National Bureau of Economic Research, Inc.
    2. Diarmaid Addison-Smyth & Kieran McQuinn, 2010. "Quantifying Revenue Windfalls from the Irish Housing Market," The Economic and Social Review, Economic and Social Studies, vol. 41(2), pages 201-233.
    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. Lawless, Martina & Lydon, Reamonn & McIndoe-Calder, 2015. "The Financial Position of Irish Households," Quarterly Bulletin Articles, Central Bank of Ireland, pages 66-89, January.
    5. Glennerster, Howard, 2012. "Why was a wealth tax for the UK abandoned?: lessons for the policy process and tackling wealth inequality," LSE Research Online Documents on Economics 42582, London School of Economics and Political Science, LSE Library.
    6. Watson, Dorothy & Maître, Bertrand & Russell, Helen, 2015. "Transitions into and out of Household Joblessness, 2004 to 2014: An Analysis of the Central Statistics Office (CSO) Quarterly National Household Survey (QNHS)," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT296.
    7. Åsa Johansson & Chistopher Heady & Jens Matthias Arnold & Bert Brys & Laura Vartia, 2008. "Taxation and Economic Growth," OECD Economics Department Working Papers 620, OECD Publishing.
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    Cited by:

    1. Lawless, Martina & Lynch, Donal, 2017. "Gifts and inheritances in Ireland," Papers WP579, Economic and Social Research Institute (ESRI).
    2. Thor O Thoresen & Marius A K Ring & Odd E Nygård & Jon Epland, 2022. "A Wealth Tax at Work [Behavioural Responses to a Wealth Tax]," CESifo Economic Studies, CESifo Group, vol. 68(4), pages 321-361.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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