CIPR | Center For Inter-American Policy & Research

Tulane University

CEQ Working Paper No 12: High Incomes and Personal Taxation in a Developing Economy: Colombia 1993-2010


High Incomes and Personal Taxation in a Developing Economy: Colombia 1993-2010
Working Paper No. 12

A working document by:
Facundo Alvaredo
Nuffield/EMod-Oxford, Paris School of Economics, Conicet
Juliana Londoño Vélez
Paris School of Economics, Ministry of Finance and Public Credit, Colombia

Abstract
We present series of the shares of income accruing to the top groups of the distribution in Colombia between 1993 and 2010, based on individual income tax data. We obtain four main empirical results. First, income in Colombia is highly concentrated, the top 1% of the income distribution 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. Second, high-income individuals in Colombia are, in essence, rentiers and capital owners. Third, while households’ 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 survey based Gini coefficients are adjusted to take into account higher incomes reported to tax files, inequality levels are higher, and the recent reduction in inequality is less pronounced. Fourth, income taxation does little to reduce the high levels of inequality.

Access the working document here:
Updated March 2013
CEQ Working Paper No 12: High Incomes and Personal Taxation in a Developing Economy: Colombia 1993-2010

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