How Business Income Measures Affect Income Inequality and the Tax Burden

Rolf Aaberge, Jørgen Modalsli, Marco Francesconi and Ola Vestad

No 17458, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper presents estimates of income concentration and inequality for Norway using a new comprehensive measure of income, which identifies business income as it is earned by companies rather than when it is paid out as dividends to owners. We assemble several sources of high quality register data that allow us to account for multiple layers of business ownership across all companies between 2001 and 2018. Compared to official statistics, the new measure implies that the share of income attributable to the top 1% of the distribution more than doubles and the Gini coefficient estimates increase by about 40%. Our new measure identifies substantial tax regressivity for individuals in the top percentile, a feature that cannot be detected by standard income measures. For instance, while the share of gross income paid in taxes by individuals at the 99th percentile is about 36% in 2016, the corresponding share paid by individuals in the top 1% is 19%.

Keywords: income distribution; top income shares; Gini coefficient; dividends; retained earnings; tax burden (search for similar items in EconPapers)
JEL-codes: D31 D63 E01 H24 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2024-11
New Economics Papers: this item is included in nep-fdg, nep-lab, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://docs.iza.org/dp17458.pdf (application/pdf)

Related works:
Working Paper: How Business Income Measures Affect Income Inequality and the Tax Burden (2024)
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:iza:izadps:dp17458

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().