Progressive taxes and top income shares: A historical perspective on pre- and post-tax income concentration in Switzerland

Frey, Christian; Schaltegger, Christoph A.

doi:10.1016/j.econlet.2016.08.041

Cited by 9 publications

(6 citation statements)

References 18 publications

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“…This question has interested researchers and policymakers alike in the wake of a decline over several decades in income tax progressivity around the Western world. Several studies have examined the issue, looking at either cross-country evidence or within-country variation over the income distribution (see, e.g., Feenberg and Poterba, 1993;Slemrod, 1996;Slemrod and Bakija, 2000;Brewer, Saez and Shephard, 2010;Bach, Corneo and Steiner, 2013;Förster, Llena-Nozal and Nafilyan, 2014;Piketty, Saez and Stantcheva, 2014;Duncan and Sabirianova Peter, 2016;Frey andSchaltegger, 2016 andSaez, 2017), but the complex interdependence between income taxation and income inequality poses powerful hurdles to identify this relationship and it is fair to say that consensus has not been reach over how it looks.…”

Section: Introductionmentioning

confidence: 99%

Tax progressivity and top incomes evidence from tax reforms

Rubolino

Waldenström

2020

J Econ Inequal

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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. * We thank Spencer Bastani and Håkan Selin for comments and the Swedish Research Council for financial support.

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Section: Introductionmentioning

confidence: 99%

Tax progressivity and top incomes evidence from tax reforms

Rubolino

Waldenström

2020

J Econ Inequal

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“…Also, based on tax data we are able to cover the very top of the income scale reliably, whereas underrepresentation at the top is a well known weakness of survey data. Additionally, based on Frey and Schaltegger (2016) we are able to discriminate between the effects on pre-and after-tax incomes and we may also assess the impact of fiscal decentralization on redistribution due to progressive income taxes.…”

Section: Empirical Studiesmentioning

confidence: 99%

“…Schaltegger and Gorgas (2011) make use of this institutional feature to estimate and compare income concentration on a cantonal level. Frey and Schaltegger (2016) determine the evolution of top income shares after taxes and also the redistributive effect of income taxes. Our analysis is based on their data set.…”

Section: Datamentioning

confidence: 99%

“…5 We employ several income distribution measures before as well as after taxes such as the Gini coefficient and the income shares of the top 10, top 5, top 1, top 0.5 and top 0.1 % on the income scale. Furthermore, we use the measure for the redistributive effect of income taxes as estimated by Frey and Schaltegger (2016). Redistribution is determined as the percentage reduction in different inequality measures due to the effect of progressive income taxes.…”

Section: Datamentioning

confidence: 99%

“…As a measure of the cantonal tax burden we include the top marginal tax rate in our analysis (topmargtax). This variable is provided by Frey and Schaltegger (2016). It is based on a yearly publication by the Swiss Federal Tax Authorities on sub-federal income taxes in Switzerland ("Steuerbelastung in der Schweiz").…”

Section: Datamentioning

confidence: 99%

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Fiscal federalism and income inequality: An empirical analysis for Switzerland

Feld

Frey

Schaltegger

et al. 2021

Journal of Economic Behavior & Organization

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This paper analyzes the impact of fiscal federalism on income inequality and redistribution. Theoretically contradicting arguments ask for empirical evidence to obtain a better knowledge of this relationship. We rely on the institutional setting in Switzerland to study the issue empirically. According to our findings tax decentralization tends to reduce concentration in preand after-tax income without additional redistribution via progressive taxes. It is, however, crucial to consider the interdependence of decentralization and fragmentation as inequality decreasing effects of decentralization are counteracted by its interaction with fragmentation.

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