IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/19725.html

How Business Income Measures Affect Income Inequality and the Tax Burden

Author

Listed:
  • Aaberge, Rolf
  • Francesconi, Marco
  • Modalsli, Jorgen
  • Vestad, Ola

Abstract

This paper presents estimates of income concentration and inequality for Norway using a new comprehensive measure of income, which identifies business income as it is earned by companies rather than when it is paid out as dividends to owners. We assemble several sources of high quality register data that allow us to account for multiple layers of business ownership across all companies between 2001 and 2018. Compared to official statistics, the new measure implies that the share of income attributable to the top 1% of the distribution more than doubles and the Gini coefficient estimates increase by about 40%. Our new measure identifies substantial tax regressivity for individuals in the top percentile, a feature that cannot be detected by standard income measures. For instance, while the share of gross income paid in taxes by individuals at the 99th percentile is about 36% in 2016, the corresponding share paid by individuals in the top 1% is 19%.

Suggested Citation

  • Aaberge, Rolf & Francesconi, Marco & Modalsli, Jorgen & Vestad, Ola, 2024. "How Business Income Measures Affect Income Inequality and the Tax Burden," CEPR Discussion Papers 19725, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:19725
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP19725
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Stefan Bach & Charlotte Bartels & Theresa Neef, 2025. "The Distribution of National Income in Germany, 1992-2019," SOEPpapers on Multidisciplinary Panel Data Research 1227, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Theo Palomo & Davi Bhering & Thiago Scot & Pierre Bachas & Luciana Barcarolo & Celso Campos & Javier Feinmann & Leonardo Moreira & Gabriel Zucman, 2025. "Tax Progressivity and Inequality in Brazil: Evidence from Integrated Administrative Data," Reports 009, EU Tax Observatory.
    4. Bach, Stefan & Bartels, Charlotte & Neef, Theresa, 2026. "The distribution of national income in Germany, 1992–2019," European Economic Review, Elsevier, vol. 181(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:19725. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CEPR (email available below). General contact details of provider: https://cepr.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.