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High incomes and personal taxation in a developing economy: Colombia 1993-2010

Author

Listed:
  • Facundo Alveredo

    (Nuffield/EMod-Oxford, Paris School of Economics, Conicet)

  • Juliana Londoño Vélez

    (Paris School of Economics, Ministry of Finance and Public Credit,Colombia)

Abstract

We present series of the shares of income accruing to the top groups of the distribution in Colombia between 1993 and 2010, based on individual income tax data. We obtain four main empirical results. First, income in Colombia is highly concentrated,the top 1% of the income distribution accounting for over 20% of total income in 2010. This is at the highest level of inequality in any recent year in the entire WTID sample.Second, high-income individuals in Colombia are, in essence, rentiers and capital owners. Third, while households’ surveys show that inequality has been decreasing since 2006, tax-based results offer a different picture, where concentration at the top has remained stable; when survey based Gini coefficients are adjusted to take into account higher incomes reported to tax files, inequality levels are higher, and the recent reduction in inequality is less pronounced. Fourth, income taxation does little to reduce the high levels of inequality.

Suggested Citation

  • Facundo Alveredo & Juliana Londoño Vélez, 2013. "High incomes and personal taxation in a developing economy: Colombia 1993-2010," Commitment to Equity (CEQ) Working Paper Series 12, Tulane University, Department of Economics.
    • Handle: RePEc:tul:ceqwps:12
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    More about this item

    Keywords

    income distribution; inequality; personal income tax; Latin America;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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