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Top income shares, business profits, and effective tax rates in contemporary Chile

Fairfield, Tasha and Jorratt, Michel (2015) Top income shares, business profits, and effective tax rates in contemporary Chile. Review of Income and Wealth, 62 (S1). S120-S144. ISSN 0034-6586

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Identification Number: 10.1111/roiw.12196


We contribute to research on inequality and world top incomes by presenting the first calculations of Chilean top income shares and effective tax rates using individual tax-return microdata from 2005 and 2009. We pay special attention to business income, which dominates at the top. Our analysis includes not only distributed profits, but also the large proportion of accrued profits retained by firms, which are rarely analyzed given the difficulty of identifying individual owners. Our most conservative top 1% income-share estimate is 15%—the fifth highest in the top incomes literature. When distributed profits are adjusted for evasion, the top 1% share reaches 22-26%. When we broaden the income concept to include accrued profits, which we impute to taxpayers using ownership shares calculated from business tax forms, the top 1% share increases to a minimum of 23%. Despite this impressive income concentration, the top 1% pays modest average effective income-tax rates of 15–16%.

Item Type: Article
Official URL:
Additional Information: © 2015 International Association for Research in Income and Wealth
Divisions: International Development
Subjects: H Social Sciences > HN Social history and conditions. Social problems. Social reform
Date Deposited: 12 Jan 2015 10:11
Last Modified: 07 Jan 2024 03:57
Funders: International Center for Tax and Development, Sussex, UK

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