The Distribution of Top Incomes in Five Anglo‐Saxon Countries Over the Long Run |
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Authors: | A B Atkinson Andrew Leigh |
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Institution: | 1. Nuffield College, , Oxford, UK;2. Research School of Economics, Australian National University, , Canberra, ACT, Australia |
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Abstract: | Taking five Anglo‐Saxon countries that have relatively similar backgrounds and tax systems – Australia, Canada, New Zealand, the UK and the USA – we see that the shares of the very richest exhibit a strikingly similar pattern, falling in the three decades after World War II, before rising sharply from the mid‐1970s onwards. The share of the top 1 per cent is highly correlated across Anglo‐Saxon countries, more so than with the share of the next 4 per cent. Controlling for country and year fixed effects, we find that a reduction in the marginal tax rate on wage income is associated with an increase in the share of the top percentile group. Likewise, a fall in the marginal tax rate on investment income (based on a lagged moving average) is associated with a rise in the share of the top percentile group. |
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