Working Paper Series
Enrico Rubolino and Daniel Waldenström
Trends and Gradients in Top Tax Elasticities: Cross-country Evidence, 1900–2014
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: Economic history; Income inequality; Taxation; (follow links to similar papers)
JEL-Codes: D31; H21; H24; H26; N40; (follow links to similar papers)
74 pages, March 27, 2017
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