Details
| Original language | English |
|---|---|
| Article number | 102548 |
| Journal | Journal of International Money and Finance |
| Volume | 122 |
| Early online date | 6 Nov 2021 |
| Publication status | Published - Apr 2022 |
| Externally published | Yes |
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.
Keywords
- Asset allocation, Capital income taxation, Foreign portfolio investment
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Finance
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
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In: Journal of International Money and Finance, Vol. 122, 102548, 04.2022.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Taxation and the external wealth of nations
T2 - Evidence from bilateral portfolio holdings
AU - Huizinga, Harry
AU - Todtenhaupt, Maximilian
AU - Voget, Johannes
AU - Wagner, Wolf
PY - 2022/4
Y1 - 2022/4
N2 - 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.
AB - 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.
KW - Asset allocation
KW - Capital income taxation
KW - Foreign portfolio investment
UR - http://www.scopus.com/inward/record.url?scp=85120746545&partnerID=8YFLogxK
U2 - 10.1016/j.jimonfin.2021.102548
DO - 10.1016/j.jimonfin.2021.102548
M3 - Article
AN - SCOPUS:85120746545
VL - 122
JO - Journal of International Money and Finance
JF - Journal of International Money and Finance
SN - 0261-5606
M1 - 102548
ER -