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Evaluating options for shifting tax burden to top income earners


  • Jorge Onrubia

    (Universidad Complutense de Madrid)

  • Fidel Picos

    (European Commission - JRC)

  • María del Carmen Rodado

    (Universidad Rey Juan Carlos)


During the last decade, research on income inequality has paid special attention to top income earners. At the same time, top marginal tax rates on upper income earners have declined sharply in many OECD countries. Discussions are still open on the relationship between the increase of the income share of the richest and to what extent the tax burden should be shifted towards top income earners. In this paper we analyse these questions by building and computing a theoretical framework using the decomposition by income groups proposed by Lambert and Aronson (1993) and Alvaredo (2011). We show that for three types of revenue-neutral reforms based on Pfähler (1984) the redistributive effect is always higher than before the reform. When the size of the rich group is sufficiently small we also find that the best option is allocating tax changes proportionally to net income, and the worst doing it proportionally to tax liabilities.

Suggested Citation

  • Jorge Onrubia & Fidel Picos & María del Carmen Rodado, 2016. "Evaluating options for shifting tax burden to top income earners," JRC Working Papers on Taxation & Structural Reforms 2016-05, Joint Research Centre.
  • Handle: RePEc:ipt:taxref:201605

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    References listed on IDEAS

    1. 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.
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    3. Thomas Piketty & Emmanuel Saez & Stefanie Stantcheva, 2014. "Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 230-271, February.
    4. repec:hal:pseose:halshs-00944873 is not listed on IDEAS
    5. R. A. Musgrave & Tun Thin, 1948. "Income Tax Progression, 1929-48," Journal of Political Economy, University of Chicago Press, vol. 56(6), pages 498-498.
    6. Alvaredo, Facundo, 2011. "A note on the relationship between top income shares and the Gini coefficient," Economics Letters, Elsevier, vol. 110(3), pages 274-277, March.
    7. Jakobsson, Ulf, 1976. "On the measurement of the degree of progression," Journal of Public Economics, Elsevier, vol. 5(1-2), pages 161-168.
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    More about this item


    inequality; personal income tax; redistribution; top incomes;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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