What Determines Top Income Shares? The Role of the Interactions between Financial Integration and Tax Policy

Le rôle des interactions entre l'intégration financière et la politique fiscale dans la montée des hauts revenus

Thibault Darcillon

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: This article aims at analyzing the role of the interactions between financial deregulation policies and changes in top tax marginal rates to explain the evolution in top income shares since the 1980s in most OECD countries. I argue that higher financial integration should have an increasing-effect on top income shares by resulting in lower marginal top tax rates. First, international financial integration has gradually contributed to increased tax competition by raising capital mobility. Second, financial integration also reflects higher bargaining power for top earners, pushing for a reduction in marginal top tax rates. Based on instrumental variables and simultaneous equations system regressions, I find strong evidence of my hypothesis: first, financial integration is negatively correlated with higher top marginal tax rates; second, this result seems to explain the negative relationship between marginal top tax rates and top income shares.

Keywords: Financial integration; top income shares; tax policy; Intégration financière; part des hauts revenus; politique fiscale (search for similar items in EconPapers)
Date: 2016-04
New Economics Papers: this item is included in nep-pbe
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01316927
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in 2016

Downloads: (external link)
https://shs.hal.science/halshs-01316927/document (application/pdf)

Related works:
Working Paper: What Determines Top Income Shares? The Role of the Interactions between Financial Integration and Tax Policy (2016)
Working Paper: What Determines Top Income Shares? The Role of the Interactions between Financial Integration and Tax Policy (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-01316927

Access Statistics for this paper

More papers in Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Bibliographic data for series maintained by CCSD ().