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The Role of Capital Income for Top Incomes Shares in Germany

Author

Listed:
  • Charlotte Bartels

    (University of Berlin)

  • Katharina Jenderny

    (Umeå University = Umeå Universitet)

Abstract
A large literature has documented top income share series based on income tax statistics using the common methodology established by Piketty (2001, 2003). The widespread disappearance of capital income from the income tax base poses a major challenge to the comparability of these series both over time and between countries. In Germany, capital income was gradually excluded from the income tax base between 2001 and 2009. Using a rich data set containing all income taxpayers' files we provide a homogeneous top income share series including full capital incomes from 2001 to 2010. Missing capital income since 2009 is extrapolated using a composite measure of stock dividends and interest income tax flows. We find that up to the top percentile the drop displayed in the German raw-data series in 2009 is largely attributable to the disappearance of capital income from the income tax base and not to the crisis. However, the very top of the income distribution is disproportionately hit by the crisis.

Suggested Citation

  • Charlotte Bartels & Katharina Jenderny, 2015. "The Role of Capital Income for Top Incomes Shares in Germany," World Inequality Lab Working Papers halshs-02654332, HAL.
    • Handle: RePEc:hal:wilwps:halshs-02654332
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02654332
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    distribution; income; capital; inequality; germany; top incomes;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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