We analyze the distribution of market income in Germany in the period 1992 to 2003 on the basis of an integrated dataset that encompasses the whole spectrum of the population, from the very poor to the very rich. We find a modest increase of the Gini coefficient, a substantial drop of median income and a remarkable growth of the income share accruing to the economic elite, which we define as the richest 0.001 percent of persons in the population. While the elite mainly obtains its income from business and capital, the income share that it receives in the form of wage income has been increasing. We also show that the dramatic decline of market income in the bottom half of the distribution is very much mitigated by income transfers within private households and by governmental redistribution. Copyright 2009 The Authors. Journal compilation International Association for Research in Income and Wealth 2009.

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We exploit a dataset that includes the individual tax returns of all taxpayers in the top percentile of the income distribution in Germany to pin down the effective income taxation of households with very high incomes. Taking tax base erosion into account, we find that the top percentile of the income distribution pays an effective average tax rate of 30.5% and contributes more than a quarter of total income tax revenue. Within the top percentile, the effective average tax rate is first increasing, then decreasing, with income. Since the 1990s, effective average tax rates for the German super‐rich have fallen by about a third, with major reductions occurring in the wake of the personal income tax reform of 2001–05. As a result, the concentration of net incomes at the very top of the distribution has strongly increased in Germany.

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe analyze the top tail of the wealth distribution in Germany, France, and Spain based on the first and second wave of the Household Finance and Consumption Survey (HFCS). Since top wealth is likely to be underrepresented in household surveys, we integrate big fortunes from rich lists, estimate a Pareto distribution, and impute the missing rich. In addition to the Forbes list, we rely on national rich lists since they represent a broader base for the big fortunes in those countries. As a result, the top percentile share of household wealth in Germany jumps up from 24 percent to 31 percent in the first and from 24 to 33 percent in the second wave after top wealth imputation. For France and Spain, we find only a small effect of the imputation since rich households are better captured in the survey.