Abstract

ALVAREDO, Facundo  and  LONDONO VELEZ, Juliana. High income and income tax in Colombia, 1993-2010. Rev.econ.inst. [online]. 2014, vol.16, n.31, pp.157-194. ISSN 0124-5996.

We present a series of the distribution of income accruing to the top income groups in Colombia between 1993 and 2010, based on individual income tax data.We obtain four main empirical results. 1) Income in Colombia is highly concentrated, the top 1% of the incomedistribution 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. 2) High-income individuals in Colombia are, in essence, rentiers and capital owners. 3) While household 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 a survey based on Gini coefficients are adjusted to take into account higher incomes reported in tax returns, inequality levels are higher, and the recent reduction in inequality is less pronounced.4) Income taxation does little to reduce the high levels of inequality.

Keywords : income distribution; inequality; personal income tax; Latin America.

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