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Income and Wealth Concentration in Spain from a Historical and Fiscal Perspective

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  • Facundo Alvaredo
  • Emmanuel Saez

Abstract

This paper presents series on top shares of income and wealth in Spain using personal income and wealth tax return statistics. Top income shares are highest in the 1930s, fall sharply during the first decade of the Franco dictatorship, then remain stable and low till the 1980s, and have increased 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 was much less prevalent than previously thought. Wealth concentration has been about stable from 1982 to 2005 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 model to analyze the effects of the wealth tax exemption of stocks for owners-managers introduced in 1994. We show that the reform induced substantial shifting from the taxable to tax exempt status, hence creating efficiency costs. (JEL D31, H31, O15) (c) 2009 by the European Economic Association.

Suggested Citation

  • Facundo Alvaredo & Emmanuel Saez, 2009. "Income and Wealth Concentration in Spain from a Historical and Fiscal Perspective," Journal of the European Economic Association, MIT Press, vol. 7(5), pages 1140-1167, September.
  • Handle: RePEc:tpr:jeurec:v:7:y:2009:i:5:p:1140-1167
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    References listed on IDEAS

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    1. 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, January.
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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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