We document strong behavioral responses to an asset test for an old-age support program in Denmark using comprehensive administrative data. We show that the density distribution of the liquid assets targeted by the test exhibits large but diffuse excess mass below the threshold for the treated group relative to control groups of comparable but ineligible individuals. A cohort analysis exploiting the panel structure suggests that the program reduces liquid assets by 20 percent around the threshold. Analyzing high-frequency bank data on assets and cash withdrawals shows that the excess mass around the threshold largely reflects permanent rather than temporary responses. (JEL D91, G51, H24, H55, I32, J14)

This paper documents the wealth of California’s billionaires and the taxes they pay. California billionaires’ wealth exceeds $2 trillion today, the equivalent of 50% of California’s GDP. It has grown 144% from 2023 to 2025, fueled by the AI boom. Over the longer run, the real wealth of California’s billionaire class—the 0.0002% richest households—has been multiplied by 30 from 1982 to 2025, while average real family income in California has about doubled. California billionaires pay about 0.2% of their wealth in California income tax ($3.2 billion/year), representing 2.4% of total California income tax revenue on average over 2023-2025. Using Securities and Exchange Commission data from Alphabet, Meta, Oracle, and Nvidia since 2004, we estimate the trajectory of wealth, income, and taxes paid by the top 4 California billionaires—Page, Brin, Zuckerberg, Ellison (through 2020), and Huang (since 2021)—focusing on their business wealth. This group alone holds nearly $1 trillion in business wealth, almost half of total California billionaire wealth. For this group, wealth growth (+322% over 2023-2025) and low taxation (0.04% of wealth in annual California income tax) are more pronounced. The proposed one-off California billionaire tax of 5%, payable over 5 years, is both small relative to California billionaires’ wealth gains and large relative to the taxes they currently pay. We estimate that it could raise about $100 billion, with comparatively minor impacts on income tax revenue. Using empirical estimates of mobility responses to wealth taxation, we find that an annual wealth tax on California billionaires could raise substantial additional revenue even after accounting for income tax losses due to mobility. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

This paper constructs monthly distributions of national income for the United States. We develop a methodology to disaggregate annual distributions and project monthly changes in a timely manner by combining high-frequency public data sources. This allows us to estimate growth by social groups as soon as quarterly macroeconomic growth numbers are released, and to track the distributional impacts of government policies during and in the aftermath of recessions in real time. We test and validate our methodology by implementing it retrospectively back to 1976. Estimates are available at https://realtimeinequality.org.

This paper proposes a new framework to study the distribution of current taxes and the effects of tax reforms. For current taxes, labor taxes are assigned to the corresponding workers, capital taxes to the corresponding asset owners, and consumption taxes to the corresponding consumers. Current taxes capture the wedges between pre-tax prices (relevant for production) and after-tax prices (relevant for the work, saving, and consumption decisions of households) as well as the direct equity effects of taxes while being silent about efficiency. Our method does not require structural assumptions, is internally consistent, and maximizes the comparability of tax progressivity and inequality over time and across countries. Applying this methodology to the United States, we find that the effective tax rate of the top 1% has declined from about 50% in the early 1950s to 32% in 2021. It is through the corporate tax that a high degree of tax progressivity was achieved in the middle of the 20th century. To analyze the distributional effects of tax reforms, mechanical changes in tax liability by income groups and aggregate revenue effects due to household (but not firms') behavioral responses are sufficient statistics in the neoclassical optimal tax model of Diamond and Mirrlees (1971). The effects of taxes on pre-tax prices at the heart of classical tax incidence analysis are normatively irrelevant.

This paper shows that two features of wealth tax administration in Sweden-(1) filing requirements and (2) pre-populated returns-have a large impact on compliance even in an environment with highly-developed third-party reporting through information returns. Up to 1993, all taxpayers had to fill in wealth information when filing the (joint) income and wealth tax return. In 1994-1996, only those with net wealth above the exemption threshold (approximately the top 10 %) needed to fill in wealth information. This leads to a very large reduction of about half of the number of taxpayers slightly above the wealth tax exemption threshold, and a reduction of about 20 % in the total number of wealth taxpayers above the threshold. Starting in 1997, Sweden began pre-populating wealth information on tax returns for taxpayers with third-party-reported net wealth above the exemption threshold. Symmetrically, this immediately doubles the number of taxpayers slightly above the threshold and increases the number of all wealth taxpayers by almost 20 %. The introduction of information returns for financial wealth in 1986 had a comparatively small impact on wealth reporting.

This paper develops a new rule to detect US recessions by combining data on job vacancies and unemployment. We first construct a new recession indicator: the minimum of the Sahm-rule indicator (the increase in the 3-month average of the unemployment rate above its 12-month low) and a vacancy analogue. The minimum indicator captures simultaneous rises in unemployment and declines in vacancies. We then set the recession threshold to 0.29 percentage points (pp), so a recession is detected whenever the minimum indicator crosses 0.29pp. This new rule detects recessions faster than the Sahm rule: with an average delay of 1.2 months instead of 2.7 months, and a maximum delay of 3 months instead of 7 months. It is also more robust: it identifies all 15 recessions since 1929 without false positives, whereas the Sahm rule breaks down before 1960. By adding a second threshold, we can also compute recession probabilities: values between 0.29pp and 0.81pp signal a probable recession; values above 0.81pp signal a certain recession. In December 2024, the minimum indicator is at 0.43pp, implying a recession probability of 27%. This recession risk was first detected in March 2024.

Modern tax systems do not satisfactorily tax the wealthiest individuals. Meanwhile, government revenue needs have increased in the wake of the COVID-19 pandemic. This paper discusses ideas for new revenue sources focused on the top of the distribution: A progressive tax on net wealth with a high exemption threshold, a wealth tax on corporations' stock and a one-off tax on top-end unrealized capital gains. Given the size and concentration of wealth, the revenue potential of these policies is significant.

The 2023 John Bates Clark Medal of the American Economic Association was awarded to Gabriel Zucman, associate professor of economics at the University of California, Berkeley for his fundamental contributions to the study of inequality and taxation. Through meticulous empirical work and creative methodological approaches, he has revealed key trends about the concentration of global wealth, the size and distribution of tax evasion, and the tax-saving strategies of multinational companies. These findings have had a profound impact on the academic literature and on global policy debates. He has shifted the way economic research is done by showing that measurement can have a large impact in our field and on the world, inspiring many younger scholars to follow in his footsteps.

This paper proposes a new, Beveridgean model of the Phillips curve. While the New Keynesian Phillips Curve is based on monopolistic pricing under price-adjustment costs, the Beveridgean Phillips curve is based on directed-search pricing under price-adjustment costs. Under directed-search pricing, prices respond to slack instead of marginal costs. The Beveridgean Phillips curve links the inflation gap to the unemployment gap, with the following properties. First, it produces the divine coincidence: it guarantees that the rate of inflation is on target whenever the rate of unemployment is efficient. Second, whenever the Beveridge curve shifts, the Phillips curve shifts if it is formulated with inflation and unemployment, but it remains unaffected if it is formulated with inflation and labor-market tightness. Third, the Phillips curve displays a kink at the point of divine coincidence if we assume that wage decreases – which reduce workers' morale – are more costly to producers than price increases – which upset customers. These three properties describe recent US data well.

This paper reviews recent developments in the theory and practice of optimal capital taxation. We emphasize three main rationales for capital taxation. First, the frontier between capital and labour income flows is often fuzzy, thereby lending support to a broad-based, comprehensive income tax. Next, the very notions of income and consumption flows are difficult to define and measure for top wealth holders where capital gains due to asset price effects dwarf ordinary income and consumption flows. Therefore the proper way to tax billionaires is a progressive wealth tax. Finally, as individuals cannot choose their parents, there are strong meritocratic reasons why we should tax inherited wealth more than earned income or self-made wealth for which individuals can be held responsible, at least in part. This implies that the ideal fiscal system should also include a progressive inheritance tax, in addition to progressive income and wealth taxes. We then confront our prescriptions with historical experience. Although there are significant differences, we argue that observed fiscal systems in modern democracies bear important similarities with this ideal triptych.

in advanced economies has been often linked with the growth of spatial inequalities within countries, yet there is limited comparative research that studies the relationship between national and subnational economic inequality. This paper presents the first systematic attempt to create internationally comparable evidence showing how different countries perform in terms of geographic wage inequalities. We create cross-country comparable measures of spatial wage disparities between and within similarly-defined local labour market areas (LLMAs) for Canada, France, (West) Germany, the UK and the US since the 1970s, and assess their contribution to national inequality. By the end of the 2010s, spatial inequalities in LLMA mean wages are similar in Canada, France, Germany and the UK; the US exhibits the highest degree of spatial inequality. Over the study period, spatial inequalities have nearly doubled in all countries, except for France where spatial inequalities have fallen back to 1970s levels. Due to a concomitant increase in within-place inequality, the contribution of places in explaining national wage inequality has remained fairly constant over the 40-year study period, except in the UK where we document a significant increase. Whilst common global social, economic and technological shocks are important drivers of spatial inequality, this variation in levels and trends of spatial inequality opens the way to comparative research exploring the role of national institutions in mediating how global shocks translate into economic disparities between places.

We study the role of employment protection legislation (EPL) in boosting employment among older workers. Our analysis juxtaposes the quantitative employment gains with the qualitative “deadwood labor” problem that such gains entail. We do so by conducting a comprehensive analysis of the sharp and complete elimination of EPL that occurs at age 67 in Sweden, as well as reform-driven shifts in this age cutoff. First, focusing on direct separation effects, we find that 8% of jobs separate in response to the elimination of EPL. Effects stem from jobs with stronger initial EPL (long-tenure, firms subject to “last in, first out” rules), and those in the public sector. Separations appear involuntary to workers, with firms targeting plausibly unproductive (sick) workers. Second, we focus on effects of continuing jobs. While wages appear rigid to EPL, we uncover novel, sizable intensive-margin hours reductions among continuing jobs, and an 8% drop in earnings conditional on staying on the job. Third, we estimate total equilibrium effects at the cohort level, where separations fully pass through into employment to population rate effects, with no offsetting effect from hiring. On a per-capita basis, total earnings of older workers causally drop by 21.5% due to EPL elimination. We validate these local effects by leveraging a reform-driven shift in the age cutoff from 67 to 68.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract We propose to institute a new tax on corporations’ stock shares for all publicly listed companies and large private companies headquartered in G20 countries. Each of these companies would have to pay 0.2% of the value of its stock in taxes each year. As the G20 stock market capitalization is around 100% of world GDP, the tax would raise approximately 0.2% of world GDP in revenue. Because stock ownership is highly concentrated among the rich, this tax would be progressive. The tax could be paid in kind by corporations (by issuing new stock) so that the tax does not raise liquidity issue nor affect business operations. In today’s globalized and fast-moving world, companies can become enormously valuable once they establish market power, even before they start making large profits (e.g., Amazon and Tesla). This tax would make them start paying taxes sooner than standard income taxes.

This paper describes the historical experience of wealth taxation in Europe and draws lessons from this history for wealth taxation in the twenty-first century. We show that the wealth tax base was narrow in European countries, due to large exemptions, tax avoidance, and evasion. The paper explains why such exemptions were granted and how they undermined the European wealth taxes. Drawing from this experience, we lay out the key design and enforcement features required for a successful wealth tax in the twenty-first century and compare this ideal wealth tax to proposals recently made in the United States.

This article first describes the main developments in measuring the upper tail of the income and wealth distributions over the last twenty years. Second, it points out some of the key methodological challenges and how better data could address them. Third, it discusses the academic and policy impacts of upper tail measurement.

I estimate that dividend taxes, by impacting the cost of equity financing, have large effects on the financing, investment, and real outcomes of many US public firms. But—in contrast with economists’ longstanding focus on capital investment outcomes—I find these responses are mostly from smaller, cash-constrained firms through “non-capital” investment channels: R&D and operating expenditures. Exploiting a quasi-experiment that tracks financing and expenditure responses to the 2003 dividend tax cut, I estimate a large, immediate, and sustained increase in average equity financing (+86% ± 11%) by these firms, reflecting a high elasticity to the cost of capital. Responsive firms put the cash substantially toward operating expenditures and R&D, rather than tangible investment. I also find higher job growth and long-run sales among the responsive firms. These results make sense, reconciling mixed evidence in recent research: because dividend taxes affect the cost of equity financing, the firms impacted most are those that actually rely on equity financing—smaller, often unprofitable, less capital-intensive firms who invest heavily in “non-capital” pathways.

We propose to institute a new tax on corporations' stock shares for all publicly listed companies and large private companies headquartered in G20 countries. Each of these companies would have to pay 0.2% of the value of its stock in taxes eachyear. As the G20 stock market capitalization is around 100% of world GDP, the tax would raise approximately 0.2% of world GDP in revenue. Because stock ownership is highly concentrated among the rich, this tax would be progressive. The tax could be paid in kind by corporations (by issuing new stock) so that the tax does not raise liquidity issue nor affect business operations. In today's globalized and fast-moving world, companies can become enormously valuable once they establish market power, even before they start making large profits (e.g., Amazon and Tesla). This tax would make them start paying taxes sooner than standard income taxes.