High incomes and personal taxation in a developing economy: Colombia 1993-2010

Facundo Alvaredo () and Juliana Londoño Vélez ()
Additional contact information
Facundo Alvaredo: Nuffield/EMod-Oxford, Paris School of Economics, Conicet
Juliana Londoño Vélez: Paris School of Economics, Ministry of Finance and Public Credit,Colombia
Authors registered in the RePEc Author Service: Juliana Londoño-Vélez

No 12, Commitment to Equity (CEQ) Working Paper Series from Tulane University, Department of Economics

Abstract: We present series of the shares of income accruing to the top groups of the distribution in Colombia between 1993 and 2010, based on individual income tax data. We obtain four main empirical results. First, income in Colombia is highly concentrated,the top 1% of the income distribution accounting for over 20% of total income in 2010. This is at the highest level of inequality in any recent year in the entire WTID sample.Second, high-income individuals in Colombia are, in essence, rentiers and capital owners. Third, while households’ surveys show that inequality has been decreasing since 2006, tax-based results offer a different picture, where concentration at the top has remained stable; when survey based Gini coefficients are adjusted to take into account higher incomes reported to tax files, inequality levels are higher, and the recent reduction in inequality is less pronounced. Fourth, income taxation does little to reduce the high levels of inequality.

Keywords: income distribution; inequality; personal income tax; Latin America (search for similar items in EconPapers)
JEL-codes: D31 H24 O54 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2013-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

Published in Commitment to Equity, March 2013, pages 1-47

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http://repec.tulane.edu/RePEc/ceq/ceq12.pdf First version, 2013 (application/pdf)

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