Taxation and the external wealth of nations: Evidence from bilateral portfolio holdings

Huizinga, Harry ; Todtenhaupt, Maximilian ; Voget, Johannes ; Wagner, Wolf

Document Type: Article
Year of publication: 2022
The title of a journal, publication series: Journal of International Money and Finance
Volume: 122
Issue number: Article 102548
Page range: 1-21
Place of publication: Amsterdam [u.a.]
Publishing house: Elsevier
ISSN: 0261-5606
Publication language: English
Institution: Business School > ABWL, Taxation and Finance (Voget 2010-)
Subject: 330 Economics
Classification: JEL: G11, H24,
Keywords (English): Asset allocation, Capital income taxation, Foreign portfolio investment
Abstract: This paper examines the impact of capital income taxation on the composition of foreign portfolio investment and on long-term external wealth. Using data on bilateral portfolio positions for a sample of 37 countries over the period 2001–2017, we find that capital gains and dividend taxation reduce the share of equities in foreign investments, while interest taxation increases this share. To examine the potential effects of capital income tax reform on long-term external wealth, we simulate tax reforms in which each country replaces its actual capital income tax rates by the average tax rates in the sample. We find that the external wealth effects of such reforms can be very substantial, with estimates ranging from +8.5% for Japan to -10% for New Zealand.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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