inequalities and the individualization of wealth abstract we document the individualization of wealth in france between 1998 and 2015 using precise survey data on the property titles of assets it is characterized by an increase in the share of wealth which is individualized by spouses vs jointly owned and by an increase in the share of wealth held by singles we show that the usual measures of wealth inequality which allocate the same share of household wealth to each spouse or partner overestimate the share of wealth held by women this results in an underestimation of both the level and the growth of a wealth inequality between individuals and b the gender wealth gap we argue for better consideration of the ownership status and intra household distribution of wealth in the measurement of wealth inequality

estimating top income and wealth shares sensitivity to data and methods abstract administrative income tax data indicate that u s top income and wealth shares are both substantial and larger than shares observed in household surveys however these estimates are sensitive to the unit of analysis the income concept measured in tax records and in the case of wealth to assumptions about the correlation between income and wealth we constrain a household survey the survey of consumer finances to be conceptually comparable to tax records and are able to reconcile the much of the difference between the survey and administrative estimates wealth estimates from administrative income tax data are sensitive to model parameters

wealth taxation and wealth accumulation theory and evidence from denmark using administrative wealth records from denmark we study the effects of wealth taxes on wealth accumulation denmark used to impose one of the world s highest marginal tax rates on wealth but this tax was greatly reduced starting in 1989 and later abolished due to the specific design of the wealth tax the 1989 reform provides a compelling quasi experiment for understanding behavioral responses among the wealthiest segments of the population we find clear reduced form effects of wealth taxes in the short and medium run with larger effects on the very wealthy than on the moderately wealthy we develop a simple life cycle model with utility of residual wealth bequests allowing us to interpret the evidence in terms of structural primitives we calibrate the model to the quasi experimental moments and simulate the model forward to estimate the long run effect of wealth taxes on wealth accumulation our simulations show that the long run elasticity of taxable wealth with respect to the net of tax return is sizable at the top of the distribution

income inequality equities household debt and interest rates evidence from a century of data abstract using philippon s 2015 recently published historical household debt data this paper uses diebold and yilmaz s 2012 generalized variance decompositions and generalized impulse responses to understand the relationship between interest rates the stock market household debt and the distribution of income in the u s the results indicate that increases in the stock market and household debt increase income inequality moreover the relationship between the interest rate and income inequality is found to be negative and statistically significant we interpret our results as suggesting that high income earners derive a larger portion of their income from interest rate sensitive assets

tax evasion and inequality this paper attempts to estimate the size and distribution of tax evasion in rich countries we combine random audits the key source used to study tax evasion so far with new micro data leaked from large offshore financial institutions hsbc switzerland swiss leaks and mossack fonseca panama papers matched to population wide wealth records in norway sweden and denmark we find that tax evasion rises sharply with wealth a phenomenon random audits fail to capture on average about 3 of personal taxes are evaded in scandinavia but this figure rises to close to 30 in the top 0 01 of the wealth distribution a group that includes households with more than 45 million in net wealth a simple model of the supply of tax evasion services can explain why evasion rises steeply with wealth taking tax evasion into account increases the rise in inequality seen in tax data since the 1970s markedly highlighting the need to move beyond tax data to capture income and wealth at the top even in countries where tax compliance is generally high we also find that after reducing tax evasion by using tax amnesties tax evaders do not legally avoid taxes more this result suggests that fighting tax evasion can be an effective way to collect more tax revenue from the very wealthy

capital is back wealth income ratios in rich countries 1700 2010 how do aggregate wealth to income ratios evolve in the long run and why we address this question using 1970 2010 national balance sheets recently compiled in the top eight developed economies for the united states united kingdom germany and france we are able to extend our analysis as far back as 1700 we find in every country a gradual rise of wealth income ratios in recent decades from about 200 300 in 1970 to 400 600 in 2010 in effect today s ratios appear to be returning to the high values observed in europe in the eighteenth and nineteenth centuries 600 700 this can be explained by a long run asset price recovery itself driven by changes in capital policies since the world wars and by the slowdown of productivity and population growth in line with the s g harrod domar solow formula that is for a given net saving

taxing across borders tracking personal wealth and corporate profits globalization is making it increasingly easy for corporations to shift profits to low tax countries modern technology has also made it simpler for wealthy individuals to move funds to undeclared bank accounts in offshore tax havens both issues have featured prominently in the news and global economic debates since the financial crisis but the arguments tend to be based on relatively little empirical evidence measuring the costs of tax havens to foreign governments is fraught with difficulties however balance of payments data and corporate filings show that us companies are shifting profits to bermuda luxembourg and similar countries on a large and growing scale about 20 percent of all us corporate profits are now booked in such havens a tenfold increase since the 1980s this profit shifting is typically done within the letter of the law and thus would be best described as tax avoidance rather than fraud i attempt to quantify its cost for government coffers by taking a fresh look at the most recent macroeconomic evidence and combining it in a systematic manner over the last 15 years the effective corporate tax rate of us companies has declined from 30 to 20 percent and about two thirds of this decline can be attributed to increased profit shifting to low tax jurisdictions wealthy individuals too use tax havens sometimes legally to benefit from banking services not available in their home country and sometimes illegally to evade taxes a number of changes have sought with some success to curb that form of tax evasion over the last years yet the available evidence from switzerland and

the missing wealth of nations are europe and the u s net debtors or net creditors this paper shows that official statistics substantially underestimate the net foreign asset positions of rich countries because they fail to capture most of the assets held by households in offshore tax havens drawing on systematic anomalies in portfolio investment positions and a unique swiss dataset i find that 8 of the global financial wealth of households is held in tax havens 6 of which goes unrecorded on the basis of plausible assumptions accounting for unrecorded assets turns the eurozone officially the world s second largest net debtor into a net creditor it also reduces the u s net debt significantly the results shed new light on global imbalances and challenge the widespread view that after a decade of poor to rich capital flows external assets are now in poor countries and debts in rich countries i provide concrete proposals to improve international investment statistics

a price discrimination theory of coupons the objective of this paper is to analyze the consumer s decision in electing to use cents off coupons distributed by manufacturers of consumer products arguing that the decision to use coupons is based on the tradeoff between costs of using coupons and the savings obtained it is shown that coupons can serve as a price discrimination device to provide a lower price to a particular segment of consumers based on a price theoretic model it is shown that the users of coupons are more price elastic than nonusers of coupons and that the opportunity cost of time and other household resource variables are determinant factors in consumers decisions implications derived from the model are tested using diary panel data

income inequality in the united states 1913 1998 this paper presents new homogeneous series on top shares of income and wages from 1913 to 1998 in the united states using individual tax returns data top income and wages shares display a u shaped pattern over the century our series suggest that the large shocks that capital owners experienced during the great depression and world war ii have had a permanent effect on top capital incomes we argue that steep progressive income and estate taxation may have prevented large fortunes from fully recovering from these shocks top wage shares were flat before world war ii dropped precipitously during the war and did not start to recover before the late 1960s but are now higher than before world war ii as a result the working rich have replaced the rentiers at the top of the income distribution

bequest and tax planning evidence from estate tax returns i study bequest and wealth accumulation behavior of the wealthy subject to the estate tax shortly before death the onset of a terminal illness leads to a very significant reduction in the value of estates reported on tax returns fifteen to twenty percent with illness lasting months to years and about five to ten percent in the case of illness reported as lasting days to weeks i provide evidence suggesting that these findings cannot be explained by real shocks to net worth such as medical expenses or lost income but instead reflect deathbed estate planning the results suggest that wealthy individuals actively care about disposition of their estates but that this preference is dominated by the desire to hold on to their wealth while alive

do americans want to tax wealth evidence from online surveys abstract a vast theoretical literature in public finance has studied the desirability of capital taxation this discussion largely ignores the political feasibility of taxing wealth we provide to our knowledge the first investigation of individuals preferences over jointly taxing income and wealth we provide subjects with a set of hypothetical individuals incomes and wealth and elicit subjects preferred absolute tax bill for each individual our method allows us to unobtrusively map both income earned and accumulated wealth into desired tax levels our regression results yield roughly linear desired tax rates on income of about 14 respondents suggested tax rates indicate positive desired wealth taxation when we distinguish between sources of wealth we find that in line with recent theoretical arguments subjects implied tax rate on wealth is 3 when the source of wealth is inheritance far higher than the 0 8 rate when wealth is from savings textual analysis of respondents justifications for their tax rates imply limited concern for the elasticity of tax bases with respect to net of tax rates

the value of registry data for consumption analysis an application to health shocks abstract this paper measures consumption expenditures using registry data on income and asset holdings in sweden we show how a registry based measure complements traditional survey measures of consumption and can alleviate some critical limitations we describe the construction of our measure which builds on prior work and exploits the identity coming from the household budget constraint between consumption expenditures and income net of savings we demonstrate the value of the registry based measure to study consumption responses to shocks also relative to surveyed consumption in our application to health shocks we find that swedish household experience permanent earning drops but generous social transfers provide substantial consumption smoothing we document important heterogeneity in consumption responses and the limited role for private means

what do we know about evolution of top wealth shares in the united states in piketty s 2014 prominent book capital in the twenty first century he argues that the concentration of wealth may become increasingly extreme in the future as piketty reminds us the group of rentiers people living off accumulated capital has been historically large and politically and socially influential because so much of large fortunes end up being inherited the current concentration of wealth is bound to predict at least weakly and perhaps strongly how important rentiers will be regardless of whether one buys into depictions such as the rentier enemy of democracy p 422 the extent to which the well off are going to rely on work versus rely on the returns to their wealth in the future is clearly important for assessing the extent to which a society will view itself as in some way a meritocracy given that the us economy has experienced rising inequality in its income and earning distributions for example piketty and saez 2003 or see the symposium on the top 1 percent in the summer 2013 issue of this journal one would expect that the distribution of wealth would follow a similar path however available evidence on this topic is much more scant and conflicting than that on income and earnings in fact when piketty 2014 reports direct estimates of wealth concentration for france the united kingdom sweden and the united states in chapter 10 of his book he finds as yet little evidence of dramatic increase in wealth concentration in any of these countries

inheritance and wealth inequality evidence from population registers we use new population wide register data on inheritances and wealth in sweden to estimate the causal impact of inheritances on wealth inequality we find that inheritances reduce relative wealth inequality e g the gini coefficient falls by 5 10 percent but that absolute dispersion increases examining different parts of the wealth distribution we find that the top decile s wealth share decreases substantially whereas the wealth share of the bottom half increases from a negative to a positive share in essence wealthier heirs inherit larger amounts but less wealthy heirs inherit more relative to their pre inheritance wealth we also find that post inheritance behavioral adjustments mitigate the equalizing effect of inheritances because less wealthy heirs consume larger shares of their inheritances moreover we find that the swedish inheritance tax reduced the equalizing inheritance effect but that the redistribution of tax revenues could reverse this result finally we show that inheritances increase wealth mobility

a simpler theory of optimal capital taxation abstract this paper develops a theory of optimal capital taxation that expresses optimal tax formulas in sufficient statistics we first consider a simple model with utility functions linear in consumption and featuring heterogeneous utility for wealth in this case there are no transitional dynamics the steady state is reached immediately and has finite elasticities of capital with respect to the net of tax rate this allows for a tractable optimal tax analysis with formulas expressed in terms of empirical elasticities and social preferences that can address many important policy questions these formulas can easily be taken to the data to simulate optimal taxes which we do using u s tax return data on labor and capital incomes second we show how these results can be extended to the case with concave utility for consumption the same types of formulas carry over by appropriately defining elasticities we show that one can recover all the results from the simpler model using a new and non standard steady state approach that respects individual preferences even with a fully general utility function

top incomes in the long run of history a recent literature has constructed top income shares time series over the long run for more than twenty countries using income tax statistics top incomes represent a small share of the population but a very significant share of total income and total taxes paid hence aggregate economic growth per capita and gini inequality indexes are sensitive to excluding or including top incomes we discuss the estimation methods and issues that arise when constructing top income share series including income definition and comparability over time and across countries tax avoidance and tax evasion we provide a summary of the key empirical findings most countries experience a dramatic drop in top income shares in the first part of the twentieth century in general due to shocks to top capital incomes during the wars and depression shocks top income shares do not recover in the immediate postwar decades however over the last thirty years top income shares have increased substantially in english speaking countries and in india and china but not in continental european countries or japan this increase is due in part to an unprecedented surge in top wage incomes as a result wage income comprises a larger fraction of top incomes than in the past finally we discuss the theoretical and empirical models that have been proposed to account for the facts and the main questions that remain open

women wealth and mobility using estate tax returns data we observe that the share of women among the very wealthy in the united states peaked in the late 1960s at nearly one half and then declined to one third we argue that this pattern reflects changes in the importance of dynastic wealth with the share of women proxying for inher ited wealth if so wealth mobility decreased until the 1970s and rose thereafter such an interpretation is consistent with technological change driving long term trends in mobility and inequality as well as the recent divergence between top wealth and top income shares documented elsewhere jel d31 j16 j62 033 the extent of and changes in intergenerational mobility of wealth are central to understanding dynamics of wealth inequality but are hard to measure in this paper we argue that the share of women among the wealthiest americans can be used as a proxy for the importance of inherited rela tive to self made wealth this approach assumes that women tend to inherit rather than make great fortunes if so a higher share of women among the wealthy would reflect a rise in inherited wealth at the top and thus lower wealth mobility conversely higher wealth mobility where self made wealth replaces inherited wealth would result in more men at the top of the wealth distribution judged by this proxy and corroborated by various data sources wealth mobility decreased in the period 1925 1969 and increased thereafter such a pattern is consistent with an important role for technological change in shaping the wealth distribution and can provide an explanation for why wealth concentra tion has remained stable despite increasing income concentration in the last three decades over the past century the share of women among the very wealthy followed an inverse u pattern peaking in the late 1960s according to estate tax returns in 1925 one quarter of the wealthiest 0 01 percent were women this fraction rose rapidly through world war ii wwii and then more slowly to peak in 1969 when women neared parity with men since then the decline has been marked by 2000 women s share had fallen to one third its prewar level while the rise was evident among all wealth groups in the top 1 percent of the wealth distribution the decline was confined to the very top figure ia graphs the share of women for four different groups in the top 1 percent among decedents by year figure ib does the same for the living population with the help of estate multipliers a method that treats death as a random sampling device and uses mortality rates by age and gender to infer the distribution of wealth among the living as described in the data appendix while the rise in the share of women among the wealthy until the 1960s could reflect improve ments in women s economic status labor market gains work against the recent decline for instance since the 1970s the share of women among top earners top 0 1 percent has risen by

species preservation versus development an experimental investigation under uncertainty the safe minimum standard sms is a decision rule to preserve renewable resources unless the social costs of doing so are intolerable while unpersuasive to many support for the sms has been advocated by some economists for settings involving irreversibility and a high degree of uncertainty the objective of this paper is to explore decision making involving species preservation versus development within an experimental laboratory setting and involving uncertainty the experimental design implements a number of prior game theoretic investigations of the sms bishop 1978 ready and bishop 1991 palmini 1999 involving insurance and lottery or combined games against nature the choices are between species preservation which possibly provides a cure for a disease or developing habitat leading to irreversible depletion econometric results from a random parameters logit model using responses from 117 participants across both u s and mexican university student samples and 9 treatment choices indicate that support for the sms varies across the type of game the imposed maximum regret condition concerning the relative magnitude of the costs of disease and net benefits of development a constructed measure of respondents risk aversion and other factors there is also strong evidence of unobservable heterogeneous preferences for preservation within our sample

how progressive is the u s federal tax system a historical and international perspective this paper provides estimates of federal tax rates by income groups in the united states since 1960 with special emphasis on very top income groups we include individual and corporate income taxes payroll taxes and estate and gift taxes the progressivity of the u s federal tax system at the top of the income distribution has declined dramatically since the 1960s this dramatic drop in progressivity is due primarily to a drop in corporate taxes and in estate and gift taxes combined with a sharp change in the composition of top incomes away from capital income and toward labor income the sharp drop in statutory top marginal individual income tax rates has contributed only moderately to the decline in tax progressivity international comparisons confirm that is it critical to take into account other taxes than the individual income tax to properly assess the extent of overall tax progressivity both for time trends and for cross country comparisons the pattern for the united kingdom is similar to the u s pattern france had less progressive taxes than the united states or the united kingdom in 1970 but has experienced an increase in tax progressivity and has now a more progressive tax system than the united states or the united kingdom

the dynamics of inequality the past forty years have seen a rapid rise in top income inequality in the united states while there is a large number of existing theories of the pareto tail of the long run income distributions almost none of these address the fast rise in top inequality observed in the data we show that standard theories which build on a random growth mechanism generate transition dynamics that are too slow relative to those observed in the data we then suggest two parsimonious deviations from the canonical model that can explain such changes scale dependence that may arise from changes in skill prices and type dependence that is the presence of some high growth types these deviations are consistent with theories in which the increase in top income inequality is driven by the rise of superstar entrepreneurs or managers

global inequality dynamics new findings from wid world this paper presents new findings on global inequality dynamics from the world wealth and income database wid world with particular emphasis on the contrast between the trends observed in the united states china france and the united kingdom we observe rising top income and wealth shares in nearly all countries in recent decades but the magnitude of the increase varies substantially thereby suggesting that different country specific policies and institutions matter considerably long run wealth inequality dynamics appear to be highly unstable we stress the need for more democratic transparency on income and wealth dynamics and better access to administrative and financial data

about capital in the twenty first century in this article i present three key facts about income and wealth inequality in the long run emerging from my book capital in the twenty first century and seek to sharpen and refocus the discussion about those trends in particular i clarify the role played by r g in my analysis of wealth inequality i also discuss some of the implications for optimal taxation and the relation between capital income ratios and capital shares

distributional national accounts methods and estimates for the united states this article combines tax survey and national accounts data to estimate the distribution of national income in the united states since 1913 our distributional national accounts capture 100 of national income allowing us to compute growth rates for each quantile of the income distribution consistent with macroeconomic growth we estimate the distribution of both pretax and posttax income making it possible to provide a comprehensive view of how government redistribution affects inequality average pretax real national income per adult has increased 60 from 1980 to 2014 but we find that it has stagnated for the bottom 50 of the distribution at about 16 000 a year the pretax income of the middle class adults between the median and the 90th percentile has grown 40 since 1980 faster than what tax and survey data suggest due in particular to the rise of tax exempt fringe benefits income has boomed at the top the upsurge of top incomes was first a labor income phenomenon but has mostly been a capital income phenomenon since 2000 the government has offset only a small fraction of the increase in inequality the reduction of the gender gap in earnings has mitigated the increase in inequality among adults but the share of women falls steeply as one moves up the labor income distribution and is only 11 in the top 0 1 in 2014

wealth inequality in the united states since 1913 evidence from capitalized income tax data this paper combines income tax returns with flow of funds data to estimate the distribution of household wealth in the united states since 1913 we estimate wealth by capitalizing the incomes reported by individual taxpayers accounting for assets that do not generate taxable income we successfully test our capitalization method in three micro datasets where we can observe both income and wealth the survey of consumer finance linked estate and income tax returns and foundations tax records wealth concentration has followed a u shaped evolution over the last 100 years it was high in the beginning of the twentieth century fell from 1929 to 1978 and has continuously increased since then the rise of wealth inequality is almost entirely due to the rise of the top 0 1 wealth share from 7 in 1979 to 22 in 2012 a level almost as high as in 1929 the bottom 90 wealth share rst increased up to the mid 1980s and then steadily declined the increase in wealth concentration is due to the surge of top incomes combined with an increase in saving rate inequality top wealth holders are younger today than in the 1960s and earn a higher fraction of total labor income in the economy we explain how our ndings can be reconciled with survey of consumer finances and estate tax data

catching up or crowding out the crowd out effects of catch up retirement contributions on non retirement saving abstract using tax data this paper exploits a discontinuous increase in retirement contribution limits based on exact date of birth this paper finds clear evidence that constrained individuals increase their retirement saving when so eligible but finds no evidence suggesting that non retirement saving falls in the baseline specifications one can rule out crowd out greater than approximately 0 38 to 0 57 at the 95 confidence level depending on the measure used this suggests that the additional contributions induced by catch up eligibility represent an increase in total private saving

household inequality entrepreneurial dynamism and corporate financing economic theories provide conflicting hypotheses on how wealth inequality affects entrepreneurial dynamism to empirically investigate its impact we construct local measures of household wealth inequality based on financial rents home equity and 1880 farmland we identify its effects on entrepreneurship by instrumenting it with land distribution under the 1862 homestead act or us states removal of death taxes wealth inequality decreases firm entry and exit and the proportion of high tech businesses across metropolitan statistical areas there is also less redistribution into public goods supportive of entrepreneurship such as schooling and the judiciary income per capita consequently grows more slowly

choice of pension management fees and effects on pension wealth abstract to shed light on the effects of individual choice on pension wealth we study a policy change to the management fees of pension funds implemented by peru s government in 2013 the reform established a new balance fee as a default option this fee is calculated as a percentage of the pension balance each individual had the initial option of keeping the previous management fee a load factor fee calculated as a percentage of the individual s salary we use administrative data to simulate pension balances based on the individual s choice of fee and the corresponding counterfactual our results indicate that the reform has been potentially adverse to 63 1 of individuals of whom 41 4 were assigned to the default option and 21 7 voluntarily chose the load fee these results reflect both the potentially negative unintended effects of the policy and an alarming lack of financial literacy among citizens we also detect heterogeneity in the intensity of the losses and gains due to the reform which caused greater losses than gains in particular younger and poorer individuals as well as those automatically assigned to the balance fee experienced higher losses moreover the new fee scheme is also associated with increasing inequality between individuals pension wealth

top wealth shares in the uk over more than a century abstract recent research highlighted controversy about the evolution of concentration of personal wealth in this paper we provide new evidence about the long run evolution of top wealth shares for the united kingdom the new series covers a long period from 1895 to the present and has a different point of departure from the previous literature we start with the analysis of the distribution of estates left at death we find that the application to the estate data of mortality multipliers to yield estimates of wealth among the living does not substantially change the degree of concentration over much of the period both in the uk and us allowing inferences to be made for years when this method cannot be applied the results show that wealth concentration in the uk remained relatively constant during the first wave of globalization but then decreased dramatically in the period from 1914 to 1979 the uk went from being more unequal in terms of wealth than the us to being less unequal however the decline in uk wealth concentration came to an end around 1980 and since then there is evidence of an increase in top shares notably in the distribution of wealth excluding housing in recent years we investigate the triangulating evidence provided by data on capital income concentration and on reported super fortunes

heterogeneity in returns to wealth and the measurement of wealth inequality lacking a long time series on the assets of the very wealthy saez and zucman 2015 use us tax records to obtain estimates of wealth holdings by capitalizing asset income from tax returns they document marked upward trends in wealth concentration we use data on tax returns and actual wealth holdings from tax records for the whole norwegian population to test the robustness of the methodology we document that measures of wealth based on the capitalization approach can lead to misleading conclusions about the level and the dynamics of wealth inequality if returns are heterogeneous and even moderately correlated with wealth

time poor working super rich abstract this paper revisits the standard model of labor supply under two additional assumptions consumption requires time and some limited amount of work is enjoyable whereas introducing each assumption without the other one does not produce novel insights combining them together does if the wage rate is sufficiently high for top earners work has a positive marginal utility at the optimum and above a critical wage level it converts into a pure consumption good their labor supply curve is first backward bending and then vertical this can justify an optimal marginal tax rate on top incomes equal to 100 top earners in the vertical half line of the labor supply curve optimally refrain from spending their entire income at the macroeconomic level this can generate a lack of effective demand with some qualifications these findings carry over to models that include savings and philanthropy