Can wealth taxation fund public investment in a caring and sustainable economy? The case of the UK

Abstract

This article develops a theoretical model integrating wealth concentration and taxation to the feminist post-Kaleckian models. We estimate the model econometrically using an instrumental variable-generalized method of moments approach for the UK. We find that an increase in the tax rate on wealth decreases wealth concentration, and has a strong positive impact on output, employment and the budget. An increase in the progressivity of income taxation by increasing the tax rate on profits and decreasing the tax rate on labour income also leads to similar results, but the effects are more modest compared to wealth taxation. Public social infrastructure investment has a high positive effect on output and productivity as well as employment and gender equality in wages and employment. Public physical infrastructure investment has also a substantial effect on output and employment, albeit creating fewer jobs for women compared to the case of social infrastructure, while productivity effects are more modest.