Working Paper: NBER ID: w23321
Authors: Fatih Guvenen; Greg Kaplan
Abstract: We revisit recent empirical evidence about the rise in top income inequality in the United States, drawing attention to four key issues that we believe are critical for an informed discussion about changing inequality since 1980. Our goal is to inform researchers, policy makers, and journalists who are interested in top income inequality.
Keywords: income inequality; top income shares; tax policy; passthrough entities
JEL Codes: E0; J0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in top income inequality observed in SSA and IRS data (D31) | divergence between 1986 and 1988 (E65) |
| income shifting from corporate to passthrough entities following the Tax Reform Act of 1986 (H22) | significant jump in top income shares in IRS data (D33) |
| growing significance of passthrough income in IRS measures (H24) | diverging patterns in top income shares from 2001 to 2012 (D31) |
| bulk of the growth in income from passthrough entities concentrated at the very top of the distribution (D33) | rise in top income shares (D33) |
| trends in top income shares reflect changes in income dynamics at both the top and bottom of the distribution (D33) | rise in top income shares (D33) |