Distributional Effects of a Wealth Tax under Lifetime-Dynastic Income Concepts

Abstract

Annual wealth tax is back on the policy agenda, but the discussion on its effect is not well informed. When standard methodology is used and wealth tax burdens are measured against annual individual income, a large share of the tax burden is found to fall on people with low incomes. The present study uses rich Norwegian administrative data to discuss the distributional effects of wealth tax under several different income concepts, ultimately measuring income over the lifetime of family dynasties. When measured against lifetime income and lifetime income in dynasties, wealth tax is mostly borne by high‐income taxpayers and is seen as clearly redistributive.