Determining the relationship between marginal income tax rates and income inequality from 1959 to 2005.

摘要

Current indicators of income inequality in the United States rival those that accompanied the stock market crash of 1929. The share of pre-tax income flowing to the top 1 percent of households in 2006 was the highest level since 1928. This study investigates the statistical relationship between marginal income tax rates and income inequality over a 46 year period. With annual data for 1959 through 2005 I use time series regression analysis to isolate the effect of marginal income tax rates on the Gini coefficient, net of labor market and macroeconomic variables.;The regression results demonstrate a very strong negative association between marginal income tax rates and income inequality. This relationship is particularly dynamic for those in higher income tax brackets.