Research

Abstract: 

Do top-income individuals support different levels of redistribution compared to the rest of society? If so, what drives these differences? We address these questions using a novel dataset that combines administrative tax records with unique survey data on the social and economic preferences of workers in Uruguay. We document a marked decline in support for redistribution among the Top 1% of the income distribution. Comparing this group with the Top 50-2%, we show that differences in support for redistribution are not solely explained by current income or demographics. A set of beliefs, perceptions, and views, including political ideology, meritocratic beliefs, and views on government, account for much of the observed differences. Instead, a set of behavioral traits and social preferences, such as altruism and risk aversion, measured through incentivized online games, contribute little to explaining the gap. Finally, the differences in support for redistribution persist even when comparing the Top 1% with other high-income groups. Together, these findings suggest that the Top 1% is a distinct group with preferences for redistribution that differ from the rest of society, even from other high-income groups.

Abstract: 

Why do some individuals choose to evade taxes while others do not? In collaboration with Uruguay’s national tax agency, we use unique data to address this question. Drawing on third-party reports, we measure income underreporting at the individual level as an indicator of tax evasion. We also collect novel survey data and link it to administrative records at the individual level. We then examine which metrics, if any, best predict tax evasion. Using survey questions and incentivized laboratory games, we measure traits such as honesty and selfishness. These traits exhibit little predictive power. In contrast, the behavior of former and current coworkers, as well as economic factors such as the marginal tax rate, are stronger predictors. 

Abstract: 

We study how U.S. state personal and corporate income taxes have affected pre-tax income inequality (income shares and top incomes) during the last century. The long panel nature of our data, from 1917 to 2018, allows us to study the effect of tax adoptions, tax cancellations, and tax changes, and to assess both immediate and long-term relationships. With event study and synthetic control designs, we generally find no statistically significant relationship between tax measures and inequality. Some of our point estimates, and also two-way fixed effects analysis, suggest that higher income taxes may reduce top incomes and income shares.