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Fundamental accrued capital gains and the measurement of top incomes: An application to Chile

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  • Ramón E. López
  • Eugenio Figueroa B.
  • Pablo Gutiérrez C.

Abstract

Most previous studies of income inequality have either ignored capital gains or have used taxable realized capital gains to estimate top incomes. Neither of these approaches is fully satisfactory. We apply for the first time a new methodology that allows us to account for fundamental accrued capital gains as part of the top incomes in a theoretically consistent manner. We estimate the shares of the superrich in Chile showing that accrued capital gains have a dramatic impact on these estimates. Also, the top income shares estimated using fundamental capital gains appear to exhibit a more stable and presumably more plausible time profile than estimates based on capital gains derived from asset market variations.

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  • Ramón E. López & Eugenio Figueroa B. & Pablo Gutiérrez C., 2015. "Fundamental accrued capital gains and the measurement of top incomes: An application to Chile," Working Papers wp409, University of Chile, Department of Economics.
    • Handle: RePEc:udc:wpaper:wp409
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    References listed on IDEAS

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    Cited by:

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    2. Rabah Arezki & Asif Islam & Grégoire Rota-Graziosi, 2021. "Working Paper 350 - Taming Private Leviathans: Regulation versus Taxation," Working Paper Series 2476, African Development Bank.
    3. Osvaldo Larranaga & Benajamin Echecopar & Nicolas Grau, 2021. "Una nueva estimacion de la desigualdad de ingresos en Chile," Working Papers wp523, University of Chile, Department of Economics.
    4. López, Ramón & Sturla Zerene, Gino, 2020. "Hyper-fortunes and the super-rich: why a wealth tax makes sense," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    5. Eduardo Olaberría, 2016. "Bringing all Chileans on board," OECD Economics Department Working Papers 1289, OECD Publishing.
    6. Ignacio Flores & Claudia Sanhueza & Jorge Atria & Ricardo Mayer, 2020. "Top Incomes in Chile: A Historical Perspective on Income Inequality, 1964–2017," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(4), pages 850-874, December.
    7. Pablo Gutiérrez Cubillos, 2022. "Gini and undercoverage at the upper tail: a simple approximation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(2), pages 443-471, April.
    8. Díaz, Juan D. & Gutiérrez Cubillos, Pablo & Tapia Griñen, Pablo, 2021. "The exponential Pareto model with hidden income processes: Evidence from Chile," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 561(C).

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