The elasticity of taxable wealth : evidence from Norway

Abstract

Using Norwegian administrative household panel data from 2009-16, we investigate the effects of wealth taxation on taxable wealth. The wealth tax reform of 2014-15 offers a compelling quasi-experiment, which enables us to isolate the tax rate variations of the households. We estimate the net-of-tax rate elasticity of taxable wealth to be 2.24 in aggregate, using a Difference-in-Difference framework. Compared to existing studies from various countries, our research indicates that the Norwegian taxation of wealth is not very distortive.