Missing Wealth Distribution, Wealth Inequality and Anti-inequality Policies

We examine how underreporting financial assets in surveys bias inequality and wealth tax assessments. Using Luxembourg Wealth Study (LWS) microdata and national accounts (NA), we focus on financial assets, the largest survey-NA gap. We implement non-proportional cross-country statistical matching using Norways’s administrative registers as a donor, preserving demographics and variables within wealth percentile cells. For Austria, Canada, and Italy, the survey to NA ratios rise substantially after correction and financial asset inequality increases, especially at the top; as an anchor, Austria’s ratio changes from 27.3% to 98.8%. Using the Reynolds-Smolesky (RS) index, both flat and progressive tax schedule becomes much more redistributive, with RS (Gini) rising by about 2x-8x across countries (e.g., 0.103-0.853 in Austria under the progressive tax schedule). We map LWS-NA concepts, bound business equity’s effect, and report robustness. These findings indicate that credible assessments of wealth tax progressivity must confront missing financial wealth.