Arbeitspapier
Tax Progressivity and Top Incomes: Evidence from Tax Reforms
We study the link between tax progressivity and top income shares. Using variation from large-scale Western tax reforms in the 1980s and 1990s and the novel synthetic control method, we find large and lasting boosting impacts on top income shares from the progressivity reductions. Effects are largest in the very top groups while earners in the bottom half of the top decile were almost unaffected by the reforms. Cuts in top marginal tax rates account for most of this outcome whereas reduced overall progressivity contributed less. Searching for mechanisms, real income responses as measured by growth in aggregate GDP per capita, registered patents and tax revenues were unaffected by the reforms. By contrast, tax avoidance behavior related to the management of capital incomes in the very income top appears to lie behind the observed effects.
- Language
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Englisch
- Bibliographic citation
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Series: IZA Discussion Papers ; No. 10666
- Classification
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Wirtschaft
Personal Income, Wealth, and Their Distributions
Taxation and Subsidies: Efficiency; Optimal Taxation
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
Tax Evasion and Avoidance
Fiscal Policies and Behavior of Economic Agents: Household
State and Local Government: Other Expenditure Categories
- Subject
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taxation
income inequality
tax policy
- Event
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Geistige Schöpfung
- (who)
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Rubolino, Enrico
Waldenström, Daniel
- Event
-
Veröffentlichung
- (who)
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Institute of Labor Economics (IZA)
- (where)
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Bonn
- (when)
-
2017
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Rubolino, Enrico
- Waldenström, Daniel
- Institute of Labor Economics (IZA)
Time of origin
- 2017
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