Tax progressivity

The Long Lasting Effects of Warfare on Tax Progressivity: Evidence from World War II

With Tomas Wilner

We study the long-term effect of warfare on tax progressivity. Using panel data on top marginal income tax rates across countries, we conduct an event study analysis in which entering the war is the event of interest. The main results show that countries participating in World War II had top income tax rates around 20% higher relative to the year before the war, compared to non-participants. (Draft coming soon)

Last updated on Nov 4, 2024
The Long Lasting Effects of Warfare on Tax Progressivity: Evidence from World War II
The Dynamics of The Distributional Impact of Fiscal Policy: a Macro-political Economy Approach
Why does the redistributing power of fiscal policy differ from country to country? I provide evidence that, although pre-tax and transfer income inequality tends to be similar across nations, post-fiscal intervention inequality varies significantly. I develop a general equilibrium model with heterogeneous agents, in which the degree of redistribution is determined endogenously. The findings reveal that the extent of redistribution is influenced by: (i) the size of economic shocks affecting the economy and (ii) the institutional rules under which fiscal policy is chosen. My model explains cross-country differences in fiscal policy’s distributional power.
Last updated on Nov 4, 2024