Taxation and the portfolio structure of Spanish households

Abstract

Using a sample of 5962 Spanish households from the Survey of Household Finances (EFF) undertaken by the Bank of Spain, this article describes the structure of their portfolio, and estimates both a Probit model and a Tobit model to test how taxation affects, respectively, the decision to invest in each asset and the relative importance of each asset within the household portfolio. The influence of taxation is measured using the average marginal personal income tax rate of the household. The estimations performed show that the marginal tax rate is significant and displays the sign expected to explain both the holding of tax favourable assets and their weight in the household portfolio.