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

Author

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  • Facundo Alvaredo

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Emmanuel Saez

    (LBNL - Lawrence Berkeley National Laboratory [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.

Suggested Citation

  • Facundo Alvaredo & Emmanuel Saez, 2007. "Income and wealth concentration in Spain in a historical and fiscal perspective," Working Papers halshs-00587714, HAL.
  • Handle: RePEc:hal:wpaper:halshs-00587714
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    1. Desigualdad de ingresos: su evolución en 100 años de historia
      by Kiko Llaneras in Politikon on 2012-05-15 11:50:18

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    Cited by:

    1. Ross Finnie & Ian Irvine, 2006. "Mobility and Gender at the Top Tail of the Earnings Distribution," The Economic and Social Review, Economic and Social Studies, vol. 37(2), pages 149-173.
    2. Olympia Bover, 2010. "Wealth Inequality And Household Structure: U.S. Vs. Spain," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(2), pages 259-290, June.
    3. James B. Davies & Susanna Sandström & Anthony Shorrocks & Edward N. Wolff, 2011. "The Level and Distribution of Global Household Wealth," Economic Journal, Royal Economic Society, vol. 121(551), pages 223-254, March.
    4. Andrews Dan & Jencks Christopher & Leigh Andrew, 2011. "Do Rising Top Incomes Lift All Boats?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-45, January.
    5. Roine, Jesper & Waldenstrom, Daniel, 2008. "The evolution of top incomes in an egalitarian society: Sweden, 1903-2004," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 366-387, February.
    6. José Mª Durán Cabré & Alejandro Esteller Moré, 2007. "An empirical analysis of wealth taxation: Equity vs. tax compliance," Working Papers 2007/1, Institut d'Economia de Barcelona (IEB).
    7. Jordi Guilera Rafecas, 2008. "Top income shares in Portugal over the twentieth century," Working Papers in Economics 195, Universitat de Barcelona. Espai de Recerca en Economia.
    8. Prados de la Escosura, Leandro, 2007. "Inequality, poverty, and the Kuznets curve In Spain, 1850-2000," IFCS - Working Papers in Economic History.WH wp07-13, Universidad Carlos III de Madrid. Instituto Figuerola.
    9. Prados de la Escosura, Leandro & Rosés, Joan R., 2008. "Proximate causes of economic growth in Spain, 1850-2000," IFCS - Working Papers in Economic History.WH wp08-12, Universidad Carlos III de Madrid. Instituto Figuerola.
    10. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    11. Facundo Alvaredo, 2007. "The Rich in Argentina over the twentieth century: From the Conservative Republic to the Peronist experience and beyond 1932-2004," Working Papers halshs-00588318, HAL.
    12. Andrew Leigh & Alberto Posso, 2009. "Top Incomes And National Savings," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(1), pages 57-74, March.
    13. A B Atkinson & Andrew Leigh, 2010. "The Distribution of Top Incomes in Five Anglo-Saxon Countries over the Twentieth Century," CEPR Discussion Papers 640, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    14. Frank A. Cowell & Philippe Kerm, 2015. "Wealth Inequality: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 671-710, September.
    15. Francisco Azpitarte, 2008. "The Household Wealth Distribution in Spain: The Role of Housing and Financial Wealth," Working Papers 83, ECINEQ, Society for the Study of Economic Inequality.
    16. Facundo Alvaredo, 2008. "Top incomes and earnings in Portugal 1936-2004," Working Papers halshs-00586795, HAL.
    17. Frederick Guy & Peter Skott, 2008. "Information and Communications Technologies, Coordination and Control, and the Distribution of Income," Journal of Income Distribution, Ad libros publications inc., vol. 17(3-4), pages 71-92, September.
    18. Emmanuel Saez & Joel Slemrod & Seth H. Giertz, 2012. "The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 3-50, March.
    19. A. B. Atkinson & J. E. Søgaard, 2013. "The long-run history of income inequality in Denmark: Top incomes from 1870 to 2010," EPRU Working Paper Series 2013-01, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    20. José Mª Durán Cabré & Alejandro Esteller Moré, 2007. "An empirical analysis of wealth taxation: Equity Vs.tax compliance," Working Papers XREAP2007-03, Xarxa de Referència en Economia Aplicada (XREAP), revised Jun 2007.
    21. Andrew Leigh, 2007. "How Closely Do Top Income Shares Track Other Measures of Inequality?," Economic Journal, Royal Economic Society, vol. 117(524), pages 619-633, November.
    22. Howard Petith, 2007. "Neoliberalismo Europeo y la Transición Española Vista desde el Enfoque de Clase y Explotación," UFAE and IAE Working Papers 687.07, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    23. Gustafsson, Björn Anders & Jansson, Birgitta, 2007. "Top Incomes in Sweden during Three-Quarters of a Century: A Micro Data Approach," IZA Discussion Papers 2672, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    income concentration; top incomes; behavioral response;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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