We quantify how sensitive is migration by star scientists to changes in personal and business tax differentials across states. We uncover large, stable, and precisely estimated effects of personal ...and corporate taxes on star scientists' migration patterns. The long-run elasticity of mobility relative to taxes is 1.8 for personal income taxes, 1.9 for state corporate income tax, and — 1.7 for the investment tax credit. While there are many other factors that drive when innovative individuals and innovative companies decide to locate, there are enough firms and workers on the margin that state taxes matter.
We study the dynamics of the distribution of wealth in an overlapping generation economy with finitely lived agents and intergenerational transmission of wealth. Financial markets are incomplete, ...exposing agents to both labor and capital income risk. We show that the stationary wealth distribution is a Pareto distribution in the right tail and that it is capital income risk, rather than labor income, that drives the properties of the right tail of the wealth distribution. We also study analytically the dependence of the distribution of wealth—of wealth inequality in particular—on various fiscal policy instruments like capital income taxes and estate taxes, and on different degrees of social mobility. We show that capital income and estate taxes can significantly reduce wealth inequality, as do institutions favoring social mobility. Finally, we calibrate the economy to match the Lorenz curve of the wealth distribution of the U.S. economy.
•Based on a unique array of administrative records and household survey microdata, we provide detailed evidence on inequality trends for the recent period of survey-based inequality reduction in ...Uruguay (2009–2016).•Inequality trends are sensitive to the data source and inequality measure.•Synthetic indices decreased, but the top 1% and 0.1% income shares fell in household survey data, whereas in the corrected administrative data, they remained steady and even increased in 2016.•Differences result from increasing inequality in the upper tail of administrative data, mainly driven by a growing share of capital income and particularly dividends.•The probability of reaching top income positions is higher for men, liberal professionals, capital income receivers, and occupations associated to health services.
In contrast to the remaining regions of the world, the available evidence from household surveys indicates that most Latin American countries experienced substantial reductions in monetary poverty and personal income inequality in the first 15 years of the 21st century. However, it is still unclear whether these trends are robust to the inequality index and database. Based on a unique array of matched social security and personal and firm income tax records, and household survey microdata, we provide detailed evidence on inequality trends for the period of survey-based inequality reduction in Uruguay (2009–2016), focusing on the top income groups and the evolution of the capital income share. We correct administrative data to account for informality and social security/income tax underreporting. Trends are sensitive to the data source and inequality measure. Synthetic indices decreased in both datasets and the top income shares diverged. This results from increasing inequality in the upper tail of administrative data, mainly driven by a growing share of capital income, and particularly dividends. The probability of reaching top income positions is higher for men, liberal professionals, capital income receivers, and occupations associated to medical services. In contrast to evidence for developed countries, the financial and tech sectors are less represented. These findings have strong implications for the design of public policies aimed to reduce persistent inequalities in developing countries.
This paper provides estimates of federal tax rates by income groups in the United States since 1960, with special emphasis on very top income groups. We include individual and corporate income taxes, ...payroll taxes, and estate and gift taxes. The progressivity of the U.S. federal tax system at the top of the income distribution has declined dramatically since the 1960s. This dramatic drop in progressivity is due primarily to a drop in corporate taxes and in estate and gift taxes combined with a sharp change in the composition of top incomes away from capital income and toward labor income. The sharp drop in statutory top marginal individual income tax rates has contributed only moderately to the decline in tax progressivity. International comparisons confirm that is it critical to take into account other taxes than the individual income tax to properly assess the extent of overall tax progressivity, both for time trends and for cross-country comparisons. The pattern for the United Kingdom is similar to the U.S. pattern. France had less progressive taxes than the United States or the United Kingdom in 1970 but has experienced an increase in tax progressivity and has now a more progressive tax system than the United States or the United Kingdom.
In recent years, researchers have used taxation statistics to estimate the share of total income held by the richest groups, such as the top 10% or the top 1%. Compiling a standardised top income ...shares dataset for 13 developed countries, I find that there is a strong and significant relationship between top income shares and broader inequality measures, such as the Gini coefficient. This suggests that panel data on top income shares may be a useful substitute for other measures of inequality over periods when alternative income distribution measures are of low quality, or unavailable.
Growing Public Lindert, Peter H.
01/2004, Volume:
1
eBook
Growing Public examines the question of whether social policies that redistribute income impose constraints on economic growth. Taxes and transfers have been debated for centuries, but only now can ...we get a clear view of the whole evolution of social spending. What kept prospering nations from using taxes for social programs until the end of the nineteenth century? Why did taxes and spending then grow so much, and what are the prospects for social spending in this century? Why did North America become a leader in public education in some ways and not others? Lindert finds answers in the economic history and logic of political voice, population aging, and income growth. Contrary to traditional beliefs, the net national costs of government social programs are virtually zero. This book not only shows that no Darwinian mechanism has punished the welfare states, but uses history to explain why this surprising result makes sense. Contrary to the intuition of many economists and the ideology of many politicians, social spending has contributed to, rather than inhibited, economic growth.
We are used to thinking about inequality within countries--about rich Americans versus poor Americans, for instance. But what about inequality between all citizens of the world? Worlds Apart ...addresses just how to measure global inequality among individuals, and shows that inequality is shaped by complex forces often working in different directions. Branko Milanovic, a top World Bank economist, analyzes income distribution worldwide using, for the first time, household survey data from more than 100 countries. He evenhandedly explains the main approaches to the problem, offers a more accurate way of measuring inequality among individuals, and discusses the relevant policies of first-world countries and nongovernmental organizations.
Summary Income inequality in the USA has increased over the past four decades. Socioeconomic gaps in survival have also increased. Life expectancy has risen among middle-income and high-income ...Americans whereas it has stagnated among poor Americans and even declined in some demographic groups. Although the increase in income inequality since 1980 has been driven largely by soaring top incomes, the widening of survival inequalities has occurred lower in the distribution—ie, between the poor and upper-middle class. Growing survival gaps across income percentiles since 2001 reflect falling real incomes among poor Americans as well as an increasingly strong association between low income and poor health. Changes in individual risk factors such as smoking, obesity, and substance abuse play a part but do not fully explain the steeper gradient. Distal factors correlated with rising inequality including unequal access to technological innovations, increased geographical segregation by income, reduced economic mobility, mass incarceration, and increased exposure to the costs of medical care might have reduced access to salutary determinants of health among low-income Americans. Having missed out on decades of income growth and longevity gains, low-income Americans are increasingly left behind. Without interventions to decouple income and health, or to reduce inequalities in income, we might see the emergence of a 21st century health-poverty trap and the further widening and hardening of socioeconomic inequalities in health.
Money has meaning that shapes its uses and social significance, including the monies low-income families draw on for survival: wages, welfare, and the Earned Income Tax Credit (EITC). This study, ...based on in-depth interviews with 115 low-wage EITC recipients, reveals the EITC is an unusual type of government transfer. Recipients of the EITC say they value the debt relief this government benefit brings. However, they also perceive it as a just reward for work, which legitimizes a temporary increase in consumption. Furthermore, unlike other means-tested government transfers, the credit is seen as a springboard for upward mobility. Thus, by conferring dignity and spurring dreams, the EITC enhances feelings of citizenship and social inclusion.
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