Skip to content

Research Paper IZA Discussion Papers 10666

Tax progressivity and top incomes: evidence from tax reforms


Publication date

Mar 2017


We study the link between tax progressivity and top income shares. Using variation from large-scale Western tax reforms in the 1980s and 1990s and the novel synthetic control method, we find large and lasting boosting impacts on top income shares from the progressivity reductions. Effects are largest in the very top groups while earners in the bottom half of the top decile were almost unaffected by the reforms. Cuts in top marginal tax rates account for most of this outcome whereas reduced overall progressivity contributed less. Searching for mechanisms, real income responses as measured by growth in aggregate GDP per capita, registered patents and tax revenues were unaffected by the reforms. By contrast, tax avoidance behavior related to the management of capital incomes in the very income top appears to lie behind the observed effects.


Economics, Income Dynamics, and Taxation


Related publications

  1. IMF shifts from dismal to pessimistic, but has a sharper message about inequality

    Enrico Rubolino and Daniel Waldenström

  2. Tax reforms and top incomes

    Enrico Rubolino and Daniel Waldenström

  3. Tax progressivity and top incomes: evidence from tax reforms

    Enrico Rubolino and Daniel Waldenström

    1. Economics
    2. Income Dynamics
    3. Taxation
  4. There's one really good reason middle-class Americans should hope Trump fails on tax reform

    Enrico Rubolino and Daniel Waldenström


Research home

Research home


Latest findings, new research

Publications search

Search all research by subject and author


Researchers discuss their findings and what they mean for society


Background and context, methods and data, aims and outputs


Conferences, seminars and workshops

Survey methodology

Specialist research, practice and study

Taking the long view

ISER's annual report


Key research themes and areas of interest