Working Paper: NBER ID: w19121
Authors: Richard V. Burkhauser; Markus H. Hahn; Roger Wilkins
Abstract: Atkinson, Piketty, and Saez (2011) survey an important new literature using income tax-based data to measure the share of income held by top income groups. But changes in tax legislation that expand the tax base to include income sources (e.g. capital gains, dividends, etc.) disproportionately held by these groups will conflate such an expansion with an increase in the share of income they hold. We provide a cautionary tale from Australia of how comprehensive tax reform legislation in 1985 substantially altered Australian top income series, especially those that do not separate taxable realized capital gains from other taxable income.
Keywords: Top Incomes; Tax Record Data; Income Distribution; Tax Reform; Australia
JEL Codes: H0; I0; J0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Tax Reform Legislation (1985) (H20) | Increased Tax Base (H29) |
| Increased Tax Base (H29) | Altered Income Measurement (E25) |
| Altered Income Measurement (E25) | Reported Increase in Top Income Shares (D33) |
| Tax Reform Legislation (1985) (H20) | Reported Increase in Top Income Shares (D33) |
| Increased Tax Base (H29) | Reported Increase in Top Income Shares (D33) |
| Tax Reform Legislation (1985) (H20) | Spike in Top Income Shares (1987 and 1988) (D33) |
| Increased Dividend Income for Top 1 Percent (D33) | Reported Increase in Top Income Shares (D33) |