We do so by constructing a team of Norwegian and international researchers to address the following questions using Norwegian micro data: (1) How do wealth taxes affect individuals' ability to finance investment in their own firm? (2) How do changes to the liquidity of investors in private firms' affect employment? (3) Do wealth taxes distort the allocation of household savings away from businesses? (4) Can wealth alleviate financial constraints in entrepreneurship, and what does that teach us about potential effects of wealth redistribution on entrepreneurship? (5) Do wealth taxes affect charitable giving? (6) What are the patterns of charitable giving in Norway, and how does this change with wealth? (7) How does capital taxation affect the heterogeneity in returns to wealth and what is the "optimal" mix of capital taxation?

Our projects use econometric techniques to test and investigate theoretical predictions of the economic consequences of capital taxation, using variations tax rates in Norway, thereby offering results particularly relevant to the evaluation of Norwegian tax policy. Although the analysis is based on Norway, results will have broad international validity, given that taxation of wealth is back on the tax policy agenda. Norway is in this sense a unique setting since it already levies both taxes, and has the richness of data necessary to study these important questions.

Prosject head: Thor Olav Thoresen

Participants:

Funding:  The Research Council of Norway (grant no 283315, prosjektbanken.forskningsradet.no/en)

Period: 2018 - 2022

Publications

Fagereng, A., L. Guiso and M. A. K. Ring (2022). The Risk Premium and Portfolio Allocation: Evidence from Differential Wealth Taxation. Manuscript, Statistics Norway.

Halvorsen, E. and T. O. Thoresen (2021). Distributional Effects of a Wealth Tax under Lifetime-Dynastic Income Concepts, Scandinavian Journal of Economics, 123(1), 184–215. (onlinelibrary.wiley.com).

Ring, M. A. K. (2022). Wealth Taxation and Household Saving: Evidence from Assessment Discontinuities in Norway (papers.ssrn.com). Revise and Resubmit, Review of Economic Studies

Ring, M. A. K. (2022). Entrepreneurial Wealth and Employment: Tracing Out the Effects of a Stock Market Crash (papers.ssrn.com). forthcoming, Journal of Finance.

Ring, M. A. K. and T. O. Thoresen (2023). Wealth Taxation and Charitable Giving (papers.ssrn.com). Manuscript, University of Texas at Austin.

Thoresen, T. O., M. A. K. Ring, Odd E. Nygård and J. Epland (2022). A Wealth Tax at Work, CESifo Economic Studies, 68(4), 321–361. (academic.oup.com)