Distributional Effects of a Wealth Tax under Lifetime‐Dynastic Income Concepts*

Annual wealth tax is back on the policy agenda, but discussion of its effect is not well informed. When standard methodology is used and wealth‐tax burdens are measured against annual individual income, it is found that a large share of the tax burden falls on people with low incomes. In this study, we use rich Norwegian administrative data to discuss the distributional effects of wealth tax under several different income concepts, ultimately measuring income over the lifetime of family dynasties. When measured against lifetime income and lifetime income in dynasties, wealth tax is mostly borne by high‐income taxpayers and is seen as clearly redistributive.     

Mobility of Top Incomes in Germany

I analyze German top income mobility using micro‐level panel data of personal income tax returns which are highly representative for top income taxpayers for the years 2001–06. Top income mobility is assessed in three dimensions: (i) persistence in top income fractiles and its stability over time, (ii) measures of individual mobility that are not dependent on the fractile size: the degree of mobility between equally sized groups and mobility in ranks, and (iii) mobility's impact on top income shares. Persistence in top income fractiles is comparatively high and fairly stable across the analyzed period. Top income recipients are less prone to downward mobility and see less variation in annual ranks than less rich tax units. Mobility's impact on income concentration is moderate. The top percentile's share is reduced by roughly 5 percent over six years.     

How Does Fiscal Consolidation Impact on Income Inequality?

In this paper, we assess the impact of fiscal consolidation on income inequality. Using a panel of 18 industrialized countries from 1978 to 2009, we find that income inequality significantly rises during periods of fiscal consolidation. In addition, while fiscal policy that is driven by spending cuts seems to be detrimental for income distribution, tax hikes seem to have an equalizing effect. We also show that the size of the fiscal consolidation program (in percentage of GDP) has an impact on income inequality. In particular, when consolidation plans represent a small share of GDP, the income gap widens, suggesting that the burden associated with the effort affects disproportionately households at the bottom of the income distribution. Considering the linkages between banking crises and fiscal consolidation, we find that the effect on the income gap is amplified when fiscal adjustments take place after the resolution of such financial turmoil. Similarly, fiscal consolidation programs combined with inflation are likely to increase inequality and the effects of fiscal adjustments on inequality are amplified during periods of relatively low growth. Our results also provide support for a non‐linear relationship between inequality and income and corroborate the idea that trade can promote a more equal distribution of income.     

Taking down the wall: Transition and inequality

In this article, we investigate the main determinants of income inequality in the transition countries of Central and Eastern Europe and the Commonwealth of Independent States during the period 1990–2018. To this end, we address a major methodological challenge that lies at the core of the cross‐country literature on income inequality: the potential endogeneity of income per capita, which is largely ignored by most empirical studies. We adopt a two‐pronged empirical strategy by (1) using trading partners’ weighted average real GDP as an instrumental variable and (2) estimating the model via the two‐stage least squares approach for static models and the generalized method of moments estimator for dynamic models. Our empirical findings are consistent with the Kuznets curve that illustrates a nonlinear relationship between income inequality and the level of economic development. We also find that the redistributive impact of fiscal policy is statistically insignificant and taxation and government spending appear to have the opposing effects on income inequality in transition economies over the sample period.     

Capital income taxation when inherited wealth is not observable

This paper extends the Atkinson-Stiglitz model of direct and indirect taxation to a dynamic setting with two unobservable characteristics: productive ability and inherited wealth. Bequests are motivated by the ‘joy of giving’. A child’s inheritance is a random variable with a probability distribution that depends on his parent’s investment in a ‘bequest technology’. Public borrowing is assumed and implies the modified golden rule. We study the optimal tax policy when two instruments are available: a non-linear (wage) income tax and a proportional tax on capital income. We show that the second instrument ought, in general, to be used but that the tax rate is not necessarily positive. However, a positive tax rate is more likely when there is a positive correlation between inherited wealth and innate ability.     

基于高收入群体的税收政策反思

中国的某些税收政策没有起到调节收入分配、缩小收入差距的作用,对形成高收入群体的收入来源和财产,往往采取轻税政策,广大低收入者由于在收入、财产等方面的匮乏使其无法享受到税收优惠的好处。中国应改变目前的税收政策取向,加大对高收入群体的征税力度,发挥税收政策调节功能,实现收入分配公平。     

Technical Progress and Its Fruits: The Idea of Development in the Works of Raul Prebisch

The Seventeenth Communist Party National People's Congress in 2007 declared, for the first time, that the Chinese government would create conditions and opportunities to promote property income growth in order to enhance common prosperity. This new policy on the one hand helps to garner support for the further financial reform in China; but on the other hand, it entails potentially adverse impacts on economic equality in China, given the current configuration of income and wealth distribution, uneven process of financial development and other socio-economic structures. Employing the Institutionalist theory on property and distribution, this paper explores the impacts of institutions and institutional changes in the financial system on income and wealth inequality in China.     

赡养系数与个人所得税税制改革

文章在估算城镇居民收入分布函数的基础上,对考虑家庭赡养系数的个人所得税税制改革的政策效果进行了模拟分析。结果发现,在保证个人所得税总税收收入基本不变的前提下,在扣除标准中考虑赡养系数后,中低收入家庭的所得税负担有所减轻,高收入家庭的税收负担相应加重;相当一部分中等收入家庭(占总人口11.44%)的边际税率下降了5个百分点,这对刺激就业有着积极的影响。因此,考虑赡养系数能够使个人所得税更好地体现税收公平并发挥调节收入分配的职能。     

Fiscal policy under a minimum‐time objective

In an endogenous growth model, we characterize the fiscal policy driven by a minimum‐time objective of economic development. We find that in equilibrium government should levy the highest possible consumption taxes, reduce public expenditures to the lowest possible level, and keep labor income tax rate and capital income tax rate satisfy a substitution relationship at the balanced budget constraint. We also identify the condition under which income tax rate should be set to zero. We further find that the equilibrium fiscal policy is equivalent to the growth‐maximizing fiscal policy, whereas it generally deviates from the welfare‐maximizing fiscal policy. We hence identify a circumstance where setting the policy goal of reaching an economic‐performance target as soon as possible cannot be justified in the sense of maximizing the welfare of households.     

Measuring lnequality in the Middle East 1990–2016: The World’s Most Unequal Region?

In this paper we combine household surveys, national accounts, income tax data and wealth data in order to estimate income concentration in the Middle East for the period 1990–2016. According to our benchmark series, the Middle East appears to be the most unequal region in the world, with a top decile income share as large as 64 percent, compared to 37 percent in Western Europe, 47 percent in the US and 55 percent in Brazil (see Alvaredo et al. 2018). This is due both to enormous inequality between countries (particularly between oil‐rich and population‐rich countries) and to large inequality within countries (which we probably under‐estimate, given the limited access to proper fiscal data). We stress the importance of increasing transparency on income and wealth in the Middle East, as well as the need to develop mechanisms of regional redistribution and investment.     

The Role of Banks in Shaping Income Inequality: A Within-Country Study

This paper investigates the role of banks in shaping income inequality. We extend the current literature on the banking–inequality nexus by examining a sample of 103 Italian provinces for the period 2000–2018. We find that a higher banking development decreases income inequality. From a methodological viewpoint, we aim to contribute to the current literature by both adjusting the index of income inequality for the presence of tax evasion in income data and applying different estimation approaches to control for endogeneity. Some policy implications emerge from the findings of this study.     

How fiscal policy affects housing market dynamics: Evidence from Spain

This paper studies how the announcements of fiscal law changes affect the real estate market, focusing on the case of Spain. An announcement of a future fiscal law change gives the opportunity to buyers to advance or delay purchases to maximize fiscal benefits. In particular, we study announcements and their posterior effects about the mortgage tax laws in 1998, 2010, 2011, and 2013 plus the VAT law in 2012. The paper is based on contextually rich data from 2004 through 2015 for Spain, provided by a real estate agent with a strong presence across the Spanish territory. We use two dependent variables to best capture the changes: time on market of a dwelling and the price discount of the dwelling. Simultaneity bias is avoided by considering that the degree of overpricing and atypicality affects time on market but not the selling price. The identification strategy is improved by considering the type of properties most affected by the changes versus the rest of properties, using a difference-in-difference estimation. We consider two tax policy announcements: income tax credit on dwelling purchases and VAT rate change on the purchases of new dwellings. In the case of the income tax credit, this fiscal policy affects only primary accommodations. In the case of the VAT tax rate, only new houses are affected. We show that credible fiscal policy announcements distort the housing market by temporarily decreasing dwellings’ time on market and their price discounts, to immediately and long-lastingly increase them just after the tax policy expires. There is a negative causal effect of tax policy announcements on the housing market.     

林业重点工程对样本农户收入不平等影响的分解与分析

本文采用15个案例县的1995—2006年3 096个样本数据分析林业重点工程对农民收入不平等及其影响程度的作用机理。研究结果显示:(1)在1995—2006年的12年间,样本农户的收入结构发生了重大变化,林业重点工程补贴收入提高了8.03个百分点;(2)林业重点工程补贴收入对样本农户收入的基尼系数的贡献呈现上升态势,从1995年的0.330 7%上升到2006年的3.794 1%;(3)林业工程收入格局与国家工程区域规划有密切关系,工程政策的影响更为显著。因此,适当调整林业重点工程政策可以更好地实现农村扶贫的目标。     

The distributional effects of progressive capital taxes

Rising inequality since the 1980s has spurred much research examining the underlying causes and potential policy responses. Among the more controversial, One of the more controversial policy proposals is a progressive capital tax in response to rising top wealth shares around the world proposes a progressive capital tax in response to rising top wealth shares around the world. This paper introduces rank-based econometric methods for dynamic power laws as a tool for estimating the effect of progressive capital taxes on the distribution of wealth under different assumptions about the impact of these taxes on household behavior. In most scenarios, we find that a small tax levied on 1% of households would substantially reshape the US wealth distribution and reduce inequality.     

Optimal income taxation with tax avoidance

We determine the optimal income tax schedule when individuals have the possibility of avoiding paying taxes. Considering a convex concealment cost function, we find that a subset of individuals, located in the interior of the income distribution, should be allowed to avoid taxes, provided that the marginal cost of avoiding the first euro is sufficiently small. This contrasts with the results of Grochulski who shows that, using a subadditive cost function, all individuals should report their true income. We also provide a characterization of the optimal income tax curve.     

Redistribution with Unobservable Bequests: A Case for Taxing Capital Income

This paper addresses the question of the optimal taxation of labour and interest income in an overlapping generations model with two unobservable characteristics, ability and inheritance. We assume realistically that saving can only be taxed anonymously, whereas the tax on labour earnings can be individualized and made non-linear. In such a setting, we show that a withholding tax on interest income along with a non-linear tax on labour income is desirable. The role of interest income taxation is to indirectly tax inherited wealth.
JEL Classification D 63, H 2     

Public policy,dynamic status preferences,and wealth inequality

This paper studies the effect of productive government spending (taxation) on aggregate savings behavior and its consequences for the dynamics of wealth inequality, taking into consideration key behavioral changes that occur during the process of economic development. Substantial empirical evidence suggests that during this process agents' preferences toward status (positional consumption) evolves according to the average wealth of the society. The sources of wealth include private capital and productive public capital, the latter financed by a distortionary income tax. This dynamic status effect impacts peoples' responses to tax policy in ways which contrast with those of the standard neoclassical model. Specifically, we find that in response to an increase in the income tax, in economies with a strong (weak) enough dynamic status effect, savings and inequality increase (decrease). Incorporating the behavioral changes to fiscal policy expands the set of mechanisms available to explain the observed variations of savings and wealth distribution dynamics that cannot be attributed to technological or other structural factors.     

Do fiscal decentralization and income inequality affect the size of the shadow economy? A panel data analysis for OECD countries

In this article, we study fiscal decentralization and inequality as driving forces of the shadow economy in advanced economies. Our empirical analysis suggests that a reduction in income inequality will contain the shadow economy, whereas expenditure and tax decentralization do not significantly impact it. As decentralization is generally believed to increase government efficiency, this result is indicative of already highly efficient public administrations. Our results further indicate that redistributive policies positively affect the size of the shadow economy, whereas the tax burden does not have any discernible effect on the shadow economy in our sample.     

Numerical simulation on property tax reform: evidence from China

This article analyses the property tax reform in China in a computable general equilibrium model that recognizes the interaction between and among housing markets in different provinces and macroeconomic development. Using real data in 2010, we present the benchmark equilibrium for reference property and income tax rates. Then, we examine different property and income tax policies and make a comparison of their production, consumption, welfare and national income. We find that the implementation of property tax would decrease the house production at the expense of welfare in taxed area. The expansion of the taxed regions may increase the total social welfare and national income. Even though property tax policy may not be able to change the income distribution in China, increasing income tax rate could narrow the income disparity. Finally, this article shows the reliability of the conclusions when sensitivity analysis on optimal condition of equilibrium computation is performed under varied property tax policy.     

财政政策对经济增长和收入分配的长期影响效应分析

政府财政政策对经济增长和收入分配有不同的影响,其中,政府消费性支出和投资性支出均对经济增长有正的促进作用,但政府支出却加大了居民收入分配的差距;税收对我国经济增长的影响均为负,其中,间接税缩小了居民收入分配差距,而直接税却拉大了居民的收入分配差距。