Associate Professor Rodrigo Caputo from Universidad de Santiago de Chile held a presentation on `Taxing the Rich the Trade-Off of Redistribution` on the 1st of October.
Abstract of his presentation:
How capital should be taxed is a central question in public finance. The answer depends, among other things, on how wealth (capital) is distributed and on how returns to it differ across owners. For most emerging economies, this type of information is unobserved. Using Chilean individual tax records for 2018–2024, we built a firm–owner panel of private equity. We compute returns and wealth concentration for firms and owners. Concentration is very high: the top 1% of owners hold about 80% of private equity. It declines after 2020 but remains high. Behind these shares there is turnover: the 2018 top owners lose ground to new ones. When the mining and finance sectors are excluded, concentration is lower and mobility at the top is higher. Returns are not increasing in wealth. Owners near the 90th percentile earn the highest mean returns but bear large idiosyncratic risk. At the very top, mean returns are lower, but risk falls sharply and risk-adjusted returns rise. These findings could be used to address relevant policy questions. For instance, in Chile there is broad political consensus that taxes on capital are high, and a gradual reduction is under discussion and will probably be implemented from 20287 onwards. Our evidence could be relevant to assess who would benefit from such a reduction, and what it may imply for the trade-off between efficiency and redistribution.