Business Incomes at the Top
AbstractBusiness income constitutes a large and increasing share of income and wealth at the top of the distribution. We discuss how tax policy treats and shapes how businesses are organized and how they distribute economic gains to owners, with the focus on closely held and pass-through firms. These considerations influence whether and how labor and capital income is observed in economic data and feed into research controversies regarding the measurement of inequality and the progressivity of the tax code. We discuss the importance of these issues in the United States and highlight that limited evidence from other countries suggests that they are likely to be important elsewhere.
CitationKopczuk, Wojciech, and Eric Zwick. 2020. "Business Incomes at the Top." Journal of Economic Perspectives, 34 (4): 27-51. DOI: 10.1257/jep.34.4.27
- D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H22 Taxation and Subsidies: Incidence
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- H25 Business Taxes and Subsidies including sales and value-added (VAT)
- K34 Tax Law