Abstract
Summary We study the income concentration in the Swiss federation over the course of the 20th century using federal income tax statistics. The results suggest that top incomes in Switzerland evolved over time rather remaining constant across different income shares. Income concentration peaked during the 1940s, with a slight downward trend until the 1990s. Over the last 15 years, top incomes have recovered. In contrast, the evolution of income concentration is much more heterogeneous on the sub-federal level for the 26 cantons because of the federalist constitution, which has a decentralized taxing power. Consequently, top incomes in some cantons have a downward trend; others show a fall and rise of top incomes over the century, as exemplified by the Kuznets’ hypothesis; some develop rather constantly; and some cantons even produce a striking upward trend.
Highlights
The evolution of income concentration across countries has received much attention in recent years both in research and in politics
The evolution of top income shares in the Swiss federation is worth studying for two reasons: First, Swiss cantons are considerably autonomous in defining their income tax burden and other fiscal policy decisions, economic policy choices and their institutional framework on the cantonal level due to the constitutionally granted fiscal federalism
We studied the evolution of top income shares in the Swiss federation over the 20th century
Summary
The evolution of income concentration across countries has received much attention in recent years both in research and in politics. The evolution of top income shares in the Swiss federation is worth studying for two reasons: First, Swiss cantons are considerably autonomous in defining their income tax burden and other fiscal policy decisions, economic policy choices and their institutional framework on the cantonal level due to the constitutionally granted fiscal federalism This institutional variety has favoured lively system competitions between the cantons that could shape the income concentration for each canton. This paper provides new evidence about the evolution of top incomes in the Swiss federation over the course of the 20th century – i.e., for Switzerland as a whole as well as for the 26 cantons at the sub-federal level.
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