Economics, Econometrics and Finance
4 years ago

Government taxes and transfers crucial in reducing income inequality, new study finds.

National Bureau of Economic Research
Recent Trends in U.S. Top Income Shares in Tax Record Data Using More Comprehensive Measures of Income Including Accrued Capital Gains
Jeff Larrimore, Richard V. Burkhauser, Gerald Auten, Philip Armour

Paper Summary

The article explores income inequality in the U.S. by analyzing tax records since 1989. By using more comprehensive income measures, the researchers found that focusing only on market income overlooks the impact of government taxes and transfers on inequality. They also discovered that using taxable realized capital gains affects the level and trend of top incomes compared to accrued capital gains.

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