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Tra86 3 top income shares can change drastically

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Unformatted text preview: ome shifting 2) Heterogeneity in tax responses due to heterogeneity in shifting opportunities [e.g., Kennedy tax cuts of ’61 vs. TRA’86] 3) Top income shares can change drastically without changes in tax rates [e.g., 1993-2000] 4) Difficult to know from single country time series the role played by top tax rate cuts in the surge of top incomes ⇒ International evidence can cast further useful evidence 19 TOP RATES AND TOP INCOMES INTERNATIONAL EVIDENCE 1) Use pre-tax top 1% income share data from 18 OECD countries since 1960 using the World Top Incomes Database 2) Compute top (statutory) individual income tax rates using OECD data [including both central and local income taxes]. Plot top 1% pre-tax income share against top MTR in 1960-4, in 2005-9, and 1960-4 vs. 2005-9 20 16 18 A. Top 1% Share and Top Marginal Tax Rate in 1960−4 Top 1% Income Share (%) 8 10 12 14 Elasticity= .07 (.15) Germany Switzerland Netherlands Finland France Canada Japan Spain 6 Australia Australia Sweden NZ Ireland US UK Italy Norway Portugal 4 Denmark 40 50 60 70 Top Marginal Tax Rate (%) 80 90 US Elasticity= 1.90 (.43) UK Canada Ireland Germany Norway Portugal Italy Australia Spain...
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