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Excluding capital gains top mtr 1913 1923 1933 1943

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Unformatted text preview: me shares in the US since 1913 5 Top 1% (excluding Capital Gains) Top MTR 1913 1923 1933 1943 1953 1963 1973 1983 1993 2003 Year 0 0 Top 1% Income Shares (%) 5 10 15 20 25 10 20 30 40 50 60 70 80 90 100 Marginal Tax Rates (%) Top 1% Income Share and Top MTR INCOME SHARE BASED ELASTICITY ESTIMATION 1) Tax Reform Episode: Compare top pre-tax income shares at t0 (before reform) and t1 (after reform) log sht1 − log sht0 e= log(1 − τt1 ) − log(1 − τt0 ) where sht is top income share and τt is the average MTR for top group in year t Identification assumption: absent tax change, sht0 = sht1 2) Full Time Series: Run regression: log sht = α + e · log(1 − τt) + εt and adding time controls to capture non-tax related top income share trends ID assumption: non-tax related changes in sht ⊥ τt 7 LONG-RUN EVIDENCE IN THE US 1) Clear correlation between top incomes and top income rates both in several short-run tax reform episodes and in the longrun [but hard to assess long-run tax causality] 2) Correlation largely absent below the top 1% (such as the next 9%) 3) Top...
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