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High incomes and personal taxation in a developing economy: Colombia 1993-2010

Author

Listed:
  • Facundo Alveredo

    () (Nuffield/EMod-Oxford, Paris School of Economics, Conicet)

  • Juliana Londoño Vélez

    () (Paris School of Economics, Ministry of Finance and Public Credit,Colombia)

Abstract

We present series of the shares of income accruing to the top groups of the distribution in Colombia between 1993 and 2010, based on individual income tax data. We obtain four main empirical results. First, income in Colombia is highly concentrated,the top 1% of the income distribution accounting for over 20% of total income in 2010. This is at the highest level of inequality in any recent year in the entire WTID sample.Second, high-income individuals in Colombia are, in essence, rentiers and capital owners. Third, while households’ surveys show that inequality has been decreasing since 2006, tax-based results offer a different picture, where concentration at the top has remained stable; when survey based Gini coefficients are adjusted to take into account higher incomes reported to tax files, inequality levels are higher, and the recent reduction in inequality is less pronounced. Fourth, income taxation does little to reduce the high levels of inequality.

Suggested Citation

  • Facundo Alveredo & Juliana Londoño Vélez, 2013. "High incomes and personal taxation in a developing economy: Colombia 1993-2010," Commitment to Equity (CEQ) Working Paper Series 12, Tulane University, Department of Economics.
  • Handle: RePEc:tul:ceqwps:12
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    File URL: http://repec.tulane.edu/RePEc/ceq/ceq12.pdf
    File Function: First version, 2013
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Miguel Jaramillo, 2014. "The Incidence of Social Spending and Taxes in Peru," Public Finance Review, SAGE Publishing, vol. 42(3), pages 391-412, May.
    2. Sean Higgins & Nora Lustig & Whitney Ruble & Timothy Smeeding, 2013. "Comparing the incidence of taxes and social spending in Brazil and the United States," Commitment to Equity (CEQ) Working Paper Series 1316, Tulane University, Department of Economics.
    3. Cabrera, Maynor & Lustig, Nora & Morán, Hilcías E., 2015. "Fiscal Policy, Inequality, and the Ethnic Divide in Guatemala," World Development, Elsevier, vol. 76(C), pages 263-279.
    4. Vito Tanzi, 2013. "Tax reform in Latin America: a long term assessment," Commitment to Equity (CEQ) Working Paper Series 1315, Tulane University, Department of Economics.
    5. repec:tul:ceqwps:1304 is not listed on IDEAS
    6. Cabrera, Maynor & Lustig, Nora & Morán, Hilcías E., 2015. "Fiscal Policy, Inequality, and the Ethnic Divide in Guatemala," World Development, Elsevier, vol. 76(C), pages 263-279.
    7. Pablo Sauma & Juan Diego Trejos, 2014. "Universidad de Costa Rica," Commitment to Equity (CEQ) Working Paper Series 1318E, Tulane University, Department of Economics.
    8. Nora Lustig, 2015. "The Redistributive Impactive of Government Spending on Education and Health Evidence from Thirteen Developing Countries in the Commitment to Equity Project," Commitment to Equity (CEQ) Working Paper Series 1330, Tulane University, Department of Economics.
    9. Facundo Alveredo & Juliana Londoño Vélez, 2013. "High incomes and personal taxation in a developing economy: Colombia 1993-2010," Commitment to Equity (CEQ) Working Paper Series 1312, Tulane University, Department of Economics.
    10. Nora Lustig, 2013. "Commitment to Equity: Diagnostic Questionnaire," Commitment to Equity (CEQ) Working Paper Series 1302, Tulane University, Department of Economics.
    11. Gabriel Burdín & Fernando Esponda & Andrea Vigorito, 2014. "Inequality and top incomes in Uruguay: a comparison between household surveys and income tax micro-data," Commitment to Equity (CEQ) Working Paper Series 1321, Tulane University, Department of Economics.
    12. Nora Lustig, 2016. "Commitment to Equity Handbook. A Guide to Estimating the Impact of Fiscal Policy on Inequality and Poverty," Commitment to Equity (CEQ) Working Paper Series 1301, Tulane University, Department of Economics.
    13. Sean Higgins & Nora Lustig, 2015. "Can Poverty-Reducing and Progressive Tax and Transfer System Hurt the Poor?," Commitment to Equity (CEQ) Working Paper Series 1333, Tulane University, Department of Economics.
    14. repec:tul:ceqwps:1314 is not listed on IDEAS
    15. Nora Lustig & Florencia Amábile & Marisa Bucheli & George Gray Molina & Sean Higgins & Miguel Jaramillo & Wilson Jiménez Pozo & Veronica Paz Arauco & Claudiney Pereira & Carola Pessino & Máximo Rossi , 2013. "The impact of taxes and social spending on inequality and poverty in Argentina, Bolivia, Brazil, Mexico, Peru, and Uruguay," Commitment to Equity (CEQ) Working Paper Series 1313, Tulane University, Department of Economics, revised Aug 2013.
    16. John Scott, 2013. "Redistributive Impact and Efficiency of Mexico's Fiscal System," Commitment to Equity (CEQ) Working Paper Series 1308, Tulane University, Department of Economics, revised Jul 2013.

    More about this item

    Keywords

    income distribution; inequality; personal income tax; Latin America;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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