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 itseffect is not well informed. When standard methodology is used and wealthtax burdens are measured against annual individual income, a large share ofthe tax burden is found to fall on people with low incomes. The present studyuses rich Norwegian administrative data to discuss the distributional effectsof wealth tax under several different income concepts, ultimately measuringincome over the lifetime of family dynasties. When measured against lifetimeincome and lifetime income in dynasties, wealth tax is mostly borne byhigh-income taxpayers and is seen as clearly redistributive.