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Can a European wealth tax close the green investment gap?

Can a European wealth tax close the green investment gap?

Kapeller, Jakob, Leitch, Stuart and Wildauer, Rafael ORCID: 0000-0001-6395-6286 (2023) Can a European wealth tax close the green investment gap? Ecological Economics, 209:107849. ISSN 0921-8009 (doi:

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This paper analyses the European Commission’s assessment of investment needs as implied by the EU’s Paris commitment. We find that official estimates of the green investment gap until 2050 are likely to seriously understate actual investment required. Against this backdrop, we assess the potential of a European wealth tax to close this investment gap. In doing so, we first provide a detailed estimate of the wealth distribution across 22 EU member countries and then develop a microsimulation model for recurring wealth taxes in these countries. The model is based on household survey data from the HFCS, but compensates for missing observations at the top of the wealth distribution by means of a Pareto model. Taking different tax designs into account, we generally find a substantial revenue potential that could contribute significantly to closing currently existing green investment gaps. We also find that compensating for the ‘missing rich’ is essential for sensibly evaluating progressive tax designs.

Item Type: Article
Uncontrolled Keywords: green infrastructure; green investment gap; wealth taxation
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Department of Accounting & Finance
Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA)
Last Modified: 24 Apr 2023 14:32

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