50 - University of California, Berkeley

010

2030

4050

6070

8090

100

Mar

gina

l Tax

Rat

es (%

)

05

1015

2025

Top

1% In

com

e Sh

are

(%)

1913 1923 1933 1943 1953 1963 1973 1983 1993 2003 2013Year

Top 1% (excluding Capital Gains) Top MTR

Top 1% Reported Income Share and Top MTR

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1913

1918

1923

1928

1933

1938

1943

1948

1953

1958

1963

1968

1973

1978

1983

1988

1993

1998

2003

2008

Top

MTR

(Fed

eral

Indi

vidu

al In

com

e Ta

x)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

US Top MTR ordinary income vs. capital gains

Top MTR Top MTR (capital gains)

Source: statistics computed by the author

Source: Department of the Treasury, Office of Tax Analysis

0%

2%

4%

6%

8%

10%

12%

1916

19

21

1926

19

31

1936

19

41

1946

19

51

1956

19

61

1966

19

71

1976

19

81

1986

19

91

1996

20

01

2006

20

11

Capital Gains

Capital Income

Business Income

Salaries

Source: Piketty and Saez, 2003 updated to 2013. Series based on pre-tax cash market income including or excluding realized capital gains, and always excluding government transfers.

US Top 0.1% Pre-‐Tax Income Share and Composi:on

Source: Goolsbee (2000), p. 365

The Top 0.01% US Income Share, Composition, and MTR

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%19

6019

6219

6419

6619

6819

7019

7219

7419

7619

7819

8019

8219

8419

8619

8819

9019

9219

9419

9619

9820

0020

0220

0420

06

Top

0.01

% s

hare

and

com

posi

tion

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Mar

gina

l Tax

Rat

e fo

r the

top

0.01

%

Wages S-Corp.

Partnership Sole Prop.

Dividends Interest

Other MTR

Source: Saez et al. (2010)

AustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustralia

CanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanada

DenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmark

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PortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugalPortugal

SpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpain

SwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSwedenSweden

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46

81

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21

41

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1%

In

co

me

Sh

are

(%

)

40 50 60 70 80 90Top Marginal Tax Rate (%)

A. Top 1% Share and Top Marginal Tax Rate in 1960−4

Source: Piketty, Saez & Stantcheva (2011)




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Elasticity= 1.90 (.43)

46

81

01

21

41

61

8T

op

1%

In

co

me

Sh

are

(%

)

40 50 60 70 80 90Top Marginal Tax Rate (%)

B. Top 1% Share and Top Marginal Tax Rate in 2005−9





FinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinland

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02

46

81

0C

ha

ng

e in

To

p 1

% I

nco

me

Sh

are

(p

oin

ts)

−40 −30 −20 −10 0 10Change in Top Marginal Tax Rate (points)

Change in Top Tax Rate and Top 1% Share, 1960-4 to 2005-9


010

2030

4050

6070

8090

100

Mar

gina

l Tax

Rat

es (%

)

05

1015

2025

Top

1% In

com

e Sh

ares

(%)

1913 1923 1933 1943 1953 1963 1973 1983 1993 2003 2013Year

Top 1% (incl. KG) Top MTRTop 1% (excl. KG) MTR K gains

Tax Avoidance: Top 1% Income Shares and Top MTR

010

2030

4050

6070

8090

100

Mar

gina

l Tax

Rat

e (%

)

010

020

030

040

050

0R

eal I

ncom

e pe

r adu

lt (1

913=

100)

1913 1923 1933 1943 1953 1963 1973 1983 1993 2003 2013Year

Top 1% Top MTRBottom 99%

Top 1% and Bottom 99% Income Growth

AustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanada DenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmark

FinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinland

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JapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapanJapan

NetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlandsNetherlands

NZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZ

NorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorwayNorway

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SpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpainSpain


SwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerland

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12

34

GD

P p

er

ca

pita

re

al a

nn

ua

l g

row

th (

%)


A. Growth and Change in Top Marginal Tax Rate

Change in Top Tax Rate and GDP per capita growth since 1960

AustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaAustraliaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanadaCanada DenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmarkDenmark

FinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinlandFinland

FranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFranceFrance

GermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermanyGermany

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ItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItalyItaly

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NZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZNZ

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SwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerlandSwitzerland

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USUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUSUS

12

34

GD

P p

er

ca

pita

re

al a

nn

ua

l g

row

th (

%)


B. Growth (adjusted for initial 1960 GDP)

Change in Top Tax Rate and GDP per capita growth since 1960

Australia

Belgium

Canada

France

Germany

Ireland

Italy

Netherlands

Norway

Sweden

Switzerland

United Kingdom

United States1

.01

.52

.02

.53

.03

.5C

EO

pa

y($

mill

ion

, lo

g−

sca

le)

.4 .5 .6 .7 .8Top Income Marginal Tax Rate

A. Average CEO compensation

Link between top tax rate and CEO pay in 2006 across countries

Australia

Belgium

Canada

France

Germany

Ireland

Italy

Netherlands

Norway

Sweden

Switzerland

United Kingdom

United States

1.0

1.5

2.0

2.5

3.0

3.5

CE

O p

ay($

mill

ion

, lo

g−

sca

le)

with

co

ntr

ols

.4 .5 .6 .7 .8Top Income Marginal Tax Rate

B. Average CEO compensation with controls

Controlling for firm profitability, governance, size, and industry

Figure 3: Total number of foreigners in different income groups

01

00

02

00

03

00

04

00

0#

of

fore

ign

ers

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

Control 1 Control 2 Treatment

Control 1= annualized income between .8 and .9 of thresholdControl 2= annualized income between .9 and .995 of threshold.

Source: Kleven, Henrik Jacobsen, et al (2013)

0%

20%

40%

60%

80%

100%

0%

5%

10%

15%

20%

25% 19

62

1967

1972

1977

1982

1987

1992

1997

2002

2007

2012

Top

Mar

gina

l Tax

Rat

e

Top

1% In

com

e Sh

are

Top 1% pre-tax income share and top tax rates

Top 1% income share Top MTR (right scale) K gains top MTR

Source: Top 1% income share: Piketty and Saez, 2003 updated to 2015, series including realized capital gains. Top MTR include Federal individual tax + uncapped FICA payroll tax.

0%

2%

4%

6%

8%

10%

12% 19

62

1967

1972

1977

1982

1987

1992

1997

2002

2007

2012

Realized capital gains

Income excluding capital gains

USTop0.1%IncomeShareandComposi7on

Source: Piketty and Saez, 2003 updated to 2015. Series based on pre-tax cash market income including realized capital gains, and always excluding government transfers.

0%

1%

2%

3%

4%

5%

6%

7%

8%

9% 19

62

1967

1972

1977

1982

1987

1992

1997

2002

2007

2012

Dividends

Other capital income

Business income

Salaries

Source: Piketty and Saez, 2003 updated to 2015. Series based on pre-tax cash market income ex cluding realized capital gains, and always excluding government transfers.

USTop0.1%IncomeShareandComposi7on(excl.Kgains)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90% 1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

2010

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arita

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Charitable Giving of Top 1% Income Earners

Mean charitable giving of top 1% divided by mean income [left y-axis]

Source: The figure depicts average charitable giving of top 1% incomes (normalized by average income per family) on the left y-axis.

Source: Saez TPE 2017

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Charitable Giving of Top 1% Income Earners

Mean charitable giving of top 1% divided by mean income [left y-axis]

Top 1% Income Share [right y-axis]

Source: The figure depicts average charitable giving of top 1% incomes (normalized by average income per family) on the left y-axis. For comparison, the figure reports the top 1% income share (on the right y-axis).

Source: Saez TPE 2017

Emmanuel Saez and Gabriel Zucman 13

is reported on tax returns. Untaxed capital income includes undistributed corpo-rate profits, the imputed rents of homeowners, capital income paid to pension accounts, and dividends and interest retained in trusts, estates, and fiduciaries.

Piketty, Saez, and Zucman (2018) estimate the distribution of 100 percent of national income by combining national accounts, tax, and survey data. As Figure 3 shows, in both fiscal income and national income statistics, the share of income earned by the top 1 percent was high before the 1930s and fell from the 1930s to the 1970s before rising again from the late 1970s on. This U-shaped evolution of income concentration is a bit less spectacular when one looks at national income rather than fiscal income, mainly because only the fraction of corporate profits paid out as dividends are included in fiscal income statistics, while all corporate profits are included in national income. Accounting for the totality of corporate profits generally increases the top 1 percent income share, but the effect is stronger in the post-World War II years, a time before the rise of pension plans somewhat broad-ened equity ownership.

One virtue of distributional national accounts is that they are not affected by legal changes in business organization. In the United States, a growing number of businesses have been organized as “pass-through” entities since the late 1980s. The income of pass-through entities—partnerships, S-corporations, sole proprietor-ships—is not subject to the corporate income tax; instead, all the income of these

Figure 3 Share of Income Earned by the Top 1 Percent

Note: This figure compares the share of fiscal income earned by the top 1 percent tax units (from Piketty and Saez 2003, updated series including capital gains in income to compute shares but not to define ranks, to smooth the lumpiness of realized capital gains) to the share of pre-tax national income earned by the top 1 percent equal-split adults (from Piketty, Saez, and Zucman 2018, updated September 2020, available on WID.world).

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Source: Saez and Zucman JEP'20

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