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Dept – Università di Pavia ________________________________________

Dept – Università di Pavia ________________________________________. Growth, taxation and the long run evolution of top incomes Discussion of A. Atkinson’s opening lecture Luigi Bernardi-Università di Pavia XVI Riunione Scientifica Siep Pavia, October 7th, 2004.

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Dept – Università di Pavia ________________________________________

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  1. Dept – Università di Pavia________________________________________ Growth, taxation and the long run evolution of top incomes Discussion of A. Atkinson’s opening lecture Luigi Bernardi-Università di Pavia XVI Riunione Scientifica Siep Pavia, October 7th, 2004 Luigi Bernardi

  2. Dept – Università di Pavia________________________________________ Main critical features of the general model • Decreasing marginal productivity of capital • Exponential increase of population • Relevance of top incomes’ share for the overall distribution of incomes (Lc↓, Gw↑) Luigi Bernardi

  3. Dept – Università di Pavia________________________________________ Top rates and share of top incomes ModelTop rateShare of Overall top incomesInequality - Managerial +/- +/- -/+ - Accumulation +/- +/- -/+ - New money +/- +/- -/+ Luigi Bernardi

  4. Dept – Università di Pavia________________________________________ National PIT: Top marginal rates 19852002Changes Canada 34 29 -5 France 65 52.7 -12.3 Germany 56 48.5 -6.5 Italy 65 45 -20 Japan 70 47.1 -22.9 The Netherlands 72 52 -20 Spain 66 48 -18 United Kingdom 60 40 -20 United States 50 38.6 -11.4 Average(unwh.) 59.8 44.5 -15.3 Luigi Bernardi

  5. Dept – Università di Pavia________________________________________ Why to increase inequality? • Ex ante inequality is already increasing • Redistribution through spending not be over valuated: - pensions & social contributions in a life-time horizon - social services mainly consumed by the middle class • How much more efficiency and simplification? • Political economy factors: - top 1% are few voters - different ideological orientation of parties rates cutting • More convincing evidences: \ - correlation with levels of spending - fiscal illusion, being difficult to cut middle income rates Luigi Bernardi

  6. Dept – Università di Pavia________________________________________ What in Italy? • Just unreliable fiscal data for 1976 – 1999 YearTop rateGross top 1%Disp. top 1% 1976 72 9.5% 7.9% 1980 72 8.2% 7.0% 1985 65 7.1% 5.5% 1990 50 8.0% 6.4% 1993 51 8.2% 6.5% 1999 45.5 8.9% 6.8% Luigi Bernardi

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