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

  • 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)

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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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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  1. 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, Instituto Figuerola de Historia y Ciencias Sociales.
  2. Prados de la Escosura Leandro, 2003. "El progreso económico de España (1850-2000)," Books, Fundacion BBVA / BBVA Foundation, edition 1, number 201136.
  3. 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.
  4. 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.
  5. 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.
  6. Leandro Prados de la Escosura, 2006. "Growth And Structural Change In Spain, 1850-2000," Working Papers in Economic History wp06-05, Universidad Carlos III, Instituto Figuerola de Historia y Ciencias Sociales.
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