State corporate tax cuts go hand in hand with rising inequality: Change in state corporate tax rate (percentage points) and change in share (percentage points) of total state income claimed by top 1% of households, 1989โ2007
Change in tax rate | Change in top 1% share |
---|---|
-3.93 | 0.55 |
-2.72 | 0.72 |
-1.10 | 0.50 |
-0.62 | 0.34 |
-0.30 | 0.38 |
0.00 | 0.43 |
0.25 | 0.38 |
0.35 | 0.36 |
0.50 | 0.33 |
0.82 | 0.31 |
1.42 | 0.35 |
3.63 | 0.30 |
Notes: Figure is a binned scatterplot that ranks state changes in corporate income taxes between 1989 and 2007 by state, and then groups them into similarly sized โbinsโ of observations. States include D.C. If data allow for an exactly equal number of observations in each bin, then bins are equally sized. If data are unequal, the number of observations in each bin is constructed using default settings on Stata binscatter command. Each binโs average change in corporate income tax rates and change in top 1% share of total income is then compared in the graph. Because it is an outlier on both measures, Alaska is omitted. Including it would strengthen the association.
Source: Data on state corporate tax rates taken from the replication file to Serrato and Zidar 2016. State top 1% shares taken from data compiled by Frank (2022).