The real effects of Norway's wealth tax policy

Abstract

Norway is one of the few countries in the world that still has taxation on wealth. Even though the tax is incremental in size, the policy is much debated in the media and there are strong conflicting opinions on the effects of this tax policy. The aim of the thesis was to analyze the effect changes in Norway’s wealth tax policy has on company investments and firms’ decisions to enter or exit the market. Analyzing effects of a policy change, is best covered using a quasi-experimental research design. Therefore, we have applied regression analysis and difference-indifferences technique as the main method for data analysis. The regression results imply that small firms’ investment opportunities are negatively affected by Norway’s wealth tax policy. More specifically, we found that investments in fixed assets are the main driver of effect on investments caused by a change in the wealth tax policy. Furthermore, our results imply that firms’ decisions to enter or exit the market is unaffected by the wealth tax policy.