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Research Paper CEPR Discussion Paper Series 11935

Trends and gradients in top tax elasticities: cross-country evidence, 1900-2014

Authors

Publication date

Mar 2017

Summary

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.

Subjects

Economics, Income Dynamics, and Taxation

Links

https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11935#


Related publications

  1. Trends and gradients in top tax elasticities: cross-country evidence, 1900-2014

    Enrico Rubolino and Daniel Waldenström

    1. Economics
    2. Income Dynamics
    3. Taxation
  2. Trends and gradients in top tax elasticity: cross-country evidence, 1900-2014

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    1. Economics
    2. Income Dynamics
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  3. How to tax the rich: trends and gradients in top tax responses

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