Trends in income distribution and direct taxation
Abstract
This PT Policy Brief presents findings on the development of income inequality in Finland since the mid-1990s. Over this period, income inequality has increased. Initially, the growth was very rapid, but it leveled off following the financial crisis. This is evident when examining developments in average incomes calculated over five-year periods.
There is income mobility in the economy, meaning that incomes vary from year to year. However, we find that mobility within the income distribution has decreased. At the same time as income inequality has increased, the progressivity of income taxation has declined. In addition to reductions in state income tax, this has been particularly driven at the top of the income distribution by the strong growth in capital income. (AI translation)
