ZEW Economist David Gstrein Receives 2026 Reinhard Selten Prize
AwardsVerein für Socialpolitik Honours Research on the Taxation of Business Wealth
David Gstrein, researcher in ZEW’s Research Unit “Corporate Taxation and Public Finance”, has been awarded this year’s Reinhard Selten Prize by the Verein für Socialpolitik (VfS). The prize recognises his research paper “Taxing Business Wealth or Profits? Evidence from German Wealth Taxation”. In the study, Gstrein analyses the effects of taxing business wealth on investment, wages and business formation. The Reinhard Selten Prize, worth 3,000 euros, is awarded annually as part of the VfS Annual Conference.
“I am delighted to receive the Reinhard Selten Prize. It is a great recognition of my research and, at the same time, extra motivation to continue exploring how taxes affect entrepreneurial decision-making. When it comes to taxing businesses, it is not only the level of the tax burden that matters, but also what the tax is levied on,” explains David Gstrein.
Lower wealth tax boosts investment and wages
The findings of the award-winning study show that whether the government taxes wealth or profits makes a difference to investment, wages and the composition of the business landscape. When the German business capital tax was abolished in 1998, the extent of the tax relief varied across municipalities. Firms whose tax rate fell by an additional 0.1 percentage points subsequently increased investment in machinery and equipment by an average of five per cent and wages by 0.4 per cent. This means that a substantial share of the tax relief benefited employees. Companies with low profitability responded particularly strongly. At the same time, the tax reduction encouraged new firms to enter the market. Based on the estimated effects, the study derives the welfare costs of both forms of taxation. Under plausible assumptions, taxing profits is the more efficient form of taxation, as a tax on business wealth directly distorts investment and, through lower wages, is borne to a significant extent by employees.
About the Reinhard Selten Prize
The Verein für Socialpolitik (VfS) was founded in 1873 and is one of the largest associations for economics in the German-speaking world. The VfS has awarded the Reinhard Selten Prize at its annual conferences since 2007. The prize honours research papers that stand out in particular for their originality, significance of the research question and clean methodology. It is named after German economist and Nobel laureate Reinhard Selten, who made fundamental contributions to game theory.
