The Evolution of High Incomes in Canada, 1920-2000
AbstractThis paper presents new homogeneous series on top shares of income from 1920 to 2000 in Canada using personal income tax return data. Top income shares display a U-shaped pattern over the century, with a precipitous drop during World War II, followed by a slower decline until 1970. Since the late 1970s, top income shares have been increasing steadily and the very top shares are now as high as in the pre-war era. As in the United States, the recent increase in top income shares is the consequence of a surge in top wages and salaries. As a result, series on the composition of incomes within the top income groups from 1946 to 2000 show a dramatic increase in the share of wages and salaries. The parallel evolution of top income shares in Canada and the United States, associated with much more modest marginal tax rate cuts in Canada, suggests that the upward trend in top shares in Canada since the late 1970s cannot be explained by tax cuts. Further evidence suggests that the upward trend in Canada derives from the United States, perhaps because many Canadians have an emigration option. A data appendix for this paper is available.
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Date of creation: Apr 2003
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Other versions of this item:
- Emmanuel Saez & Michael R. Veall, 2003. "The Evolution of High Incomes in Canada, 1920-2000," Quantitative Studies in Economics and Population Research Reports 382, McMaster University.
- Emmanuel Saez & Michael R. Veall, 2003. "The Evolution of High Incomes in Canada, 1920-2000," Social and Economic Dimensions of an Aging Population Research Papers 99, McMaster University.
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-04-09 (All new papers)
- NEP-HIS-2003-04-09 (Business, Economic & Financial History)
- NEP-PUB-2003-04-09 (Public Finance)
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