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Income and wealth concentration in Spain in a historical and fiscal perspective

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  • Facundo Alvaredo

    (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris)

  • Emmanuel Saez

    (UC Berkeley - University of California - University of California, Berkeley)

Abstract

This paper presents series on top shares of income and wealth in Spain over the 20th century using personal income and wealth tax return statistics. Top income shares are highest in the 1930s, fall sharply during the first two decades of the Franco dictatorship, and have increased slightly since the 1960s, and especially since the mid-1990s. The top 0.01% income share in Spain estimated from income tax data is comparable to estimates for the United States and France over the period 1933-1971. Those findings, along with a careful analysis of all published tax statistics, suggest that income tax evasion and avoidance among top income earners in Spain before 1980 was much less prevalent than previously thought. Wealth concentration has been about stable from 1982 to 2004 as surging real estate prices have benefited the middle class and compensated for a slight increase in financial wealth concentration in the 1990s. We use our wealth series and a simple conceptual model to analyse the effects of the wealth tax exemption of stocks for ownersmanagers introduced in 1994. We show that the reform induced substantial shifting from the taxable to tax exempt status. This shifting has eroded the wealth tax base substantially and hence the tax exemption has generated large efficiency costs.

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Bibliographic Info

Paper provided by HAL in its series PSE Working Papers with number halshs-00587714.

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Date of creation: Nov 2007
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Handle: RePEc:hal:psewpa:halshs-00587714

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Keywords: income concentration ; top incomes ; behavioral response;

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References

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  1. Ruiz-Castillo, Javier, 1998. "A Simplified Model for Social Welfare Analysis: An Application to Spain, 1973-74 to 1980-81," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(1), pages 123-41, March.
  2. Martin Feldstein, 1999. "Tax Avoidance And The Deadweight Loss Of The Income Tax," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 674-680, November.
  3. Coral del Rio & Javier Ruiz-Castillo, 2001. "Accounting for the decline in Spanish household expenditures inequality during the 1980s," Spanish Economic Review, Springer, vol. 3(3), pages 151-175.
  4. Saez, Emmanuel, 2001. "Using Elasticities to Derive Optimal Income Tax Rates," Review of Economic Studies, Wiley Blackwell, vol. 68(1), pages 205-29, January.
  5. Leandro Prados de la Escosura, 2006. "Growth, Inequality, and Poverty in Spain, 1850-2000: Evidence and Speculation," Working Papers in Economic History wp06-04, Universidad Carlos III, Departamento de Historia Económica e Instituciones.
  6. Prados De La Escosura, Leandro, 2008. "Inequality, poverty and the Kuznets curve in Spain, 1850–2000," European Review of Economic History, Cambridge University Press, vol. 12(03), pages 287-324, December.
  7. Simon Kuznets & Elizabeth Jenks, 1953. "Shares of Upper Income Groups in Income and Savings," NBER Books, National Bureau of Economic Research, Inc, number kuzn53-1.
  8. Prados de la Escosura Leandro, 2003. "El progreso económico de España (1850-2000)," Books, Fundacion BBVA / BBVA Foundation, edition 1, number 201136.
  9. Juan Mora & Antonia Febrer, 2005. "Wage Distribution In Spain, 1994-1999: An Application Of A Flexible Estimator Of Conditional Distributions," Working Papers. Serie EC 2005-04, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  10. Leandro Prados de la Escosura, 2006. "Growth And Structural Change In Spain, 1850-2000," Working Papers in Economic History wp06-05, Universidad Carlos III, Departamento de Historia Económica e Instituciones.
  11. Roger H. Gordon & Joel Slemrod, 1998. "Are "Real" Responses to Taxes Simply Income Shifting Between Corporate and Personal Tax Bases?," NBER Working Papers 6576, National Bureau of Economic Research, Inc.
  12. Emmanuel Saez & Michael R. Veall, 2005. "The Evolution of High Incomes in Northern America: Lessons from Canadian Evidence," American Economic Review, American Economic Association, vol. 95(3), pages 831-849, June.
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  1. Desigualdad de ingresos: su evolución en 100 años de historia
    by Kiko Llaneras in Politikon on 2012-05-15 06:50:18
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