Trends and gradients in top tax elasticities: Cross-country evidence, 1900-2014

Daniel Waldenström and Enrico Rubolino ()

No 11935, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We compile data spanning the period 1900–2014 and up to 30 countries to study long-run patterns in the tax elasticity of top incomes. Our results show that top tax elasticities vary tremendously over time; they were medium-to-low before 1950, virtually zero during the postwar era up to 1980 and have thereafter increased to unprecedented levels. We document a strong income gradient in tax response within the top, underlining the importance to study even small top groups separately. Several mechanisms are investigated. Tax-driven income shifting between wage and capital income is important in the very top. Wars, financial crises, and country-specific effects and trends have bearing on top elasticities whereas standard macroeconomic factors and indicators of “real responses†do not.

Keywords: Taxation; Income inequality (search for similar items in EconPapers)
JEL-codes: D31 H21 H24 H26 N40 (search for similar items in EconPapers)
Date: 2017-03
New Economics Papers: this item is included in nep-his and nep-pbe
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Trends and gradients in top tax elasticities: cross-country evidence, 1900–2014 (2019)
Working Paper: Trends and Gradients in Top Tax Elasticities: Cross-country Evidence, 1900–2014 (2017)
Working Paper: Trends and Gradients in Top Tax Elasticities: Cross-Country Evidence, 1900–2014 (2017)
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