Taxing top incomes in the emerging world: Economic impact under the microscope

Christopher Axelson, Antonia Hohmann, Jukka Pirttilä, Roxanne Raabe and Nadine Riedel

No wp-2024-37, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Rising levels of income inequality and tight government budgets have spurred discussions in many developing nations about how to appropriately tax high-income earners. In this paper, we study taxpayer responses to an increase in the top marginal tax rate in South Africa, drawing on exceptionally rich tax administrative data and a transparent empirical identification design. We establish that treated taxpayers strongly reduce their reported taxable income in response to the tax reform. Taxpayers' responses are driven by both reductions in broad income and increases in tax deductions.

Keywords: Income inequality; Taxable income; South Africa; Tax reform; Top incomes (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-pbe and nep-pub
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