The structure of the Italian personal income tax has undergone several important changes since its introduction in 1974, following a path similar to those in other advanced economies. These ...modifications have affected its redistributive impact in ways that a priori are not easily identifiable, since they have often moved in divergent directions. The aim of this paper is to study how the redistributive effect (i.e. the ability of the tax to reduce inequality in post‐tax incomes) and progressivity (i.e. the rate at which tax incidence increases with income) of the tax have changed, comparing its structure at the end of the 1970s with its current version. Contrary to what might be expected from the reduction in top marginal tax rates, after 40 years the Italian personal income tax is more redistributive and slightly more globally progressive. A simple decomposition enables one to appreciate the importance that policy choices, inflation and the evolution of income distribution have had in shaping its effects over time. The lack of automatic adjustment mechanisms to inflation has produced a strong monetary fiscal drag effect, dampening the progressivity of the tax and increasing its burden. Policy changes, however, managed to make the tax more redistributive, and not less progressive. Compared with 40 years ago, the incidence of the tax has decreased on lower incomes, while increasing on middle and high incomes.
This study examined the association of nuptial/relationship factors, financial difficulties, and socio-demographic factors with the mental health status of Australian adults. Cross-sectional ...quantitative study design. Using data from the Household, Income and Labour Dynamics in Australia (HILDA) survey wave 19, 6846 adults were included in the analysis. Mental health was measured using the mental component summary (MCS) subscale of the Short-Form Health Survey SF-36. Hierarchical multiple linear regressions were used to examine the predictors of mental health status. Overall, 7.1% of the participants reported poor mental health status. Individual financial difficulty factors explained 3.2% (p<0.001) of the variance in mental health scores. In addition, financial difficulties were negatively associated with mental health status. Nuptiality and relationship factors accounted for 9.8% (p<0.001) of the variance in mental health status. The study suggests negative marital or relationship perceptions and financial difficulties are significant factors accounting for poor mental health. This finding suggests the need for more policy attention toward the social determinants of poor mental health especially nuptiality or relationship perceptions which have received less policy and research attention in Australia.
ABSTRACT We examine the relation between managers' personal income tax rates and their corporate investment decisions. Using plausibly exogenous variation in federal and state tax rates, we find a ...positive relation between managers' personal tax rates and their corporate risk-taking. Moreover—and consistent with our theoretical predictions—we find that this relation is stronger among firms with investment opportunities that have a relatively high rate of return per unit of risk, and stronger among CEOs who have a relatively low marginal disutility of risk. Importantly, our results are unique to senior managers' tax rates––we do not find similar relations for middle-income tax rates. Collectively, our findings provide evidence that managers' personal income taxes influence their corporate risk-taking decisions. JEL Classifications: G30; G32; G38; H24; H32. Data Availability: Data are available from the sources cited in the text. Data on manager tax rates used in this paper are available at: http://acct.wharton.upenn.edu/∼dtayl/.
Global Wealth Inequality Zucman, Gabriel
Annual review of economics,
08/2019, Volume:
11, Issue:
1
Journal Article
Peer reviewed
Open access
This article reviews the recent literature on the dynamics of global wealth inequality. I first reconcile available estimates of wealth inequality in the United States. Both surveys and tax data show ...that wealth inequality has increased dramatically since the 1980s, with a top 1% wealth share of approximately 40% in 2016 versus 25-30% in the 1980s. Second, I discuss the fast-growing literature on wealth inequality across the world. Evidence points toward a rise in global wealth concentration: For China, Europe, and the United States combined, the top 1% wealth share has increased from 28% in 1980 to 33% today, while the bottom 75% share hovered around 10%. Recent studies, however, may underestimate the level and rise of inequality, as financial globalization makes it increasingly hard to measure wealth at the top. I discuss how new data sources (leaks from financial institutions, tax amnesties, and macroeconomic statistics of tax havens) can be leveraged to better capture the wealth of the rich.
Objective
This article documents wide‐ranging revisions to the Standardized World Income Inequality Database (SWIID), which seeks to maximize the comparability of income inequality estimates for the ...broadest possible coverage of countries and years.
Methods
Two k‐fold cross‐validations, by observation and by country, are used to evaluate the SWIID's success in predicting the Luxembourg Income Study (LIS), recognized in the field as setting the standard for comparability.
Results
The cross‐validations indicate that the new SWIID's estimates and their uncertainty are even more accurate than previous versions, extending its advantage in comparability over alternate income inequality data sets.
Conclusion
Given its superior coverage and comparability, the SWIID remains the optimum source of data for broadly cross‐national research on income inequality.
Abstract
Estimates of historical workers’ annual incomes suffer from the fundamental problem that they are inferred from day wage rates without knowing how many days of work day-labourers undertook ...per year. We circumvent the problem by building an income series based on the payments made to workers employed by the year rather than by the day. Our data suggest that earlier annual income estimates based on day wages overestimate medieval labour incomes but underestimate labour incomes during the Industrial Revolution. Our revised estimates indicate that modern economic growth began more than two centuries earlier than commonly thought and was driven by an ‘Industrious Revolution’. They also suggest that the current global downturn in labour's share is not exceptional but fits within the range of historical fluctuations.
Abstract
Using administrative wealth records from Denmark, we study the effects of wealth taxes on wealth accumulation. Denmark used to impose one of the world’s highest marginal tax rates on wealth, ...but this tax was greatly reduced starting in 1989 and later abolished. Due to the specific design of the wealth tax, the 1989 reform provides a compelling quasi-experiment for understanding behavioral responses among the wealthiest segments of the population. We find clear reduced-form effects of wealth taxes in the short and medium run, with larger effects on the very wealthy than on the moderately wealthy. We develop a simple life cycle model with utility of residual wealth (bequests) allowing us to interpret the evidence in terms of structural primitives. We calibrate the model to the quasi-experimental moments and simulate the model forward to estimate the long-run effect of wealth taxes on wealth accumulation. Our simulations show that the long-run elasticity of taxable wealth with respect to the net-of-tax return is sizable at the top of the distribution.
We use US household-level bank account data to investigate the heterogeneous effects of the pandemic on spending and savings. Households across the income distribution all cut spending from March to ...early April. Since mid-April, spending has rebounded most rapidly for low-income households. We find large increases in liquid asset balances for households throughout the income distribution. However, lower-income households contribute disproportionately to the aggregate increase in balances, relative to their prepandemic shares. Taken together, our results suggest that spending declines in the initial months of the recession were primarily caused by direct effects of the pandemic, rather than resulting from labor market disruptions. The sizable growth in liquid assets we observe for low-income households suggests that stimulus and insurance programs during this period likely played an important role in limiting the effects of labor market disruptions on spending.
This paper summarizes the main findings and perspectives emerging from a collective research project on the dynamics of income and wealth distribution. The primary objective is to construct a ...high-quality, long-run, international database on income and wealth concentration, using historical tax statistics. In this database, the data are annual, long-run time series; they are fairly homogenous across countries; and they are also broken down by income source. Hence they offer a unique opportunity to understand the dynamics of income and wealth distribution and the interplay between inequality and growth.
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