Thursday, July 14, 2011

On Taxes - Follow-up

To continue on my last post, Dylan Matthews directs us to Piketty and Saez's paper on historical US tax rates between 1960 and 2001. The first interesting figure is the cross country comparison of the marginal tax rate for the different income percentiles. Those rates have declined everywhere, with the decline far more pronounced in the US


The second interesting graph shows the composition of tax rates in 2004 and in 1960, with a huge fall in corporate and estate taxes. It is to note that 2004 comes after the two rounds of the Bush tax cuts(2001,2003)

 Finally, the inequality in the distribution of incomes has risen, with a sharp break in 1986.
In the paper, Piketty and Saez provide evidence that the causation does not run from lower taxes to rising income shares, which is interesting in itself.

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