Working Paper No. 1160

Trends and Gradients in Top Tax Elasticities: Cross-country Evidence, 1900–2014

Published: March 27, 2017Pages: 74Keywords: Economic history; Income inequality; TaxationJEL-codes: D31; H21; H24; H26; N40

Trends and Gradients in Top Tax Elasticities: Cross-country Evidence, 1900–2014 Enrico Rubolino and Daniel Waldenström


We compile data spanning the period 1900–2014 and up to 30 countries to study long-run patterns in the tax elasticity of top incomes. Our results show that top tax elasticities vary tremendously over time; they were medium-to-low before 1950, virtually zero during the postwar era up to 1980 and have thereafter increased to unprecedented levels. We document a strong income gradient in tax response within the top, underlining the importance to study even small top groups separately. Several mechanisms are investigated. Tax-driven income shifting between wage and capital income is important in the very top. Wars, financial crises, and country-specific effects and trends have bearing on top elasticities whereas standard macroeconomic factors and indicators of “real responses” do not.

Daniel Waldenström

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Sick of Inequality?

An Introduction to the Relationship between Inequality and Health

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In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?

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