07.11.2018

The award-winning study "A European Net Wealth Tax" was carried out as part of the Horizon-2020 EU project "FairTax", in which WIFO is a partner

WIFO project staff member Alexander Krenek and deputy WIFO director Margit Schratzenstaller received one of six Kurt-Rothschild awards for their study "A European Net Wealth Tax"

Alexander Krenek and Margit Schratzenstaller were awarded one of six Kurt-Rothschild prizes for business journalism for their study "A European Net Wealth Tax" and its dissemination. The prize was awarded by the Karl-Renner-Institut and the SPÖ-Parlamentsklub for the third time this year.

On the basis of an innovative methodical approach, which in particular enables the adequate inclusion of top wealth, the study estimates the potential income of a progressive net wealth tax, levying a tax rate of 1 percent on household net wealth between 1 and 5 million euros and of 1.5 percent on household net wealth over 5 million euros. The revenue potential ranges from up to a maximum of 0.5 percent of GDP (Slovakia, Hungary, Poland) to 2 percent or more (Belgium and Cyprus). The effective tax rates, as the ratio between potential revenues and net wealth, are below 0.5 percent in all countries. If the top asset owners are adequately taken into account, fears that a net wealth tax would necessarily have to affect a significant proportion of households in order to generate substantial revenue are unfounded in view of the very unequal distribution of wealth in the EU.

With these substantial revenues, taxes on labour, which are (too) high in many member states, could be significantly reduced. Such a revenue-neutral shift in the overall tax burden would make tax systems more employment- and growth-friendly and more socially inclusive.

The prize is reminiscent of the scientific work of Prof. Dr. Kurt Rothschild and is endowed with a total of 10,000 euros. Rothschild worked at WIFO from 1947 to 1966 after his return from exile and remained associated with the Institute as a consultant until his death in 2010. He had a lasting influence on economic research in Austria. The Rothschild Prize jury included OeNB Governor Ewald Nowotny, OeNB Director and Vice President of the National Economic Society Peter Mooslechner, Chamber of Labour economist Markus Marterbauer, OeNB senior economist Helene Schuberth and university professor Engelbert Stockhammer.