IESET.
Hypotheses·distribution·tax_inequality_reagan_1981_top_share_response

The 1981 Economic Recovery Tax Act (ERTA) cutting the US top marginal income tax rate from 70 to 50 percent produced a measurable rise in the top-1 percent pre-tax national income share within five years, consistent with the Saez-Slemrod-Giertz elasticity-of-taxable-income literature where most of the apparent response is income-shifting and reporting-form changes rather than real labour-supply expansion.

The discriminating test is the magnitude of the top-1 share level shift between 1981 and 1986 against the OECD contemporaneous control trajectory.

PARTIALengine/runs/tax_inequality_reagan_1981_top_share_response

PARTIAL — ATT=-8.931, p=0.858, N=51, treated_countries=4 (above α=0.10)

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

The evidence is suggestive but not decisive. ATT=-8.931, p=0.858, N=51, treated_countries=4 (above α=0.10)

why it matters

Distributional claims often sound morally clear but are empirically complex. This test asks whether the proposed channel explains real differences across places.

how the test works

It compares 13 country or place units from 1975 to 1990, using a did callaway santanna design, with fixed effects for country and year.

what was measured
What changed
  • Erta 1981 us post
  • Top marginal income tax rate
What we checked
  • Top 1pct pretax income share
  • Top 10pct pretax income share
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/tax_inequality_reagan_1981_top_share_response
1007550250197519831990USAGBRFRADEUITACANJPN
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show top_1pct_pretax_income_share across 13 sampled countries over 1975–1990.
The shapes above are stylised — none of the lines are real data.
Placeholder for tax_inequality_reagan_1981_top_share_response. Published chart will be generated from engine/runs/tax_inequality_reagan_1981_top_share_response/chart_data.json.

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-04-30T12:29:38Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

The 1981 Economic Recovery Tax Act (ERTA) cutting the US top marginal income tax rate from 70 to 50 percent produced a measurable rise in the top-1 percent pre-tax national income share within five years, consistent with the Saez-Slemrod-Giertz elasticity-of-taxable-income literature where most of the apparent response is income-shifting and reporting-form changes rather than real labour-supply expansion. The discriminating test is the magnitude of the top-1 share level shift between 1981 and 1986 against the OECD contemporaneous control trajectory.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

SUPPORTED if the US top-1 pre-tax share rises by at least 2 percentage points 1981-1986 AND the difference-in-differences against the OECD sample mean is positive at p<0.10. REFUTED if the US top-1 share fails to rise by 1 percentage point over the window or if the DiD coefficient is negative at p<0.10.

formal test & threshold
test:      OECD panel DiD around 1981-1986, US treated, OECD others control. Outcome top-1 pre-tax share. Country + year FE, country-clustered SEs.

Method

Template
did_callaway_santanna
Fixed effects
country, year
Clustering
country
Sample
13 countries · 1975 – 1990
Evidence type
associational

Callaway-Sant'Anna DiD with US treated 1982 onward against OECD control pool. Outcome top-1 pre-tax share. Robustness with synth_did and event study around 1981 break.

Data

VariableSourceTransform
top_1pct_pretax_income_share
outcome
owid:top-1-share-of-total-incometier 2
level
top_10pct_pretax_income_share
outcome
owid:top-10-share-of-total-incometier 2
level
erta_1981_us_post
treatment
constructed:indicator = 1 for USA, year >= 1982tier 5
indicator
top_marginal_income_tax_rate
treatment
owid:top-marginal-income-tax-ratetier 2
level
log_real_gdp_per_capita
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log
cpi_inflation
control
world_bank_wdi:FP.CPI.TOTL.ZGtier 2
level
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — tax_inequality_reagan_1981_top_share_response

Verdict: PARTIAL — ATT=-8.931, p=0.858, N=51, treated_countries=4 (above α=0.10)

Pre-registration

  • Claim: The 1981 Economic Recovery Tax Act (ERTA) cutting the US top marginal income tax rate from 70 to 50 percent produced a measurable rise in the top-1 percent pre-tax national income share within five years, consistent with the Saez-Slemrod-Giertz elasticity-of-taxable-income literature where most of the apparent response is income-shifting and reporting-form changes rather than real labour-supply expansion. The discriminating test is the magnitude of the top-1 share level shift between 1981 and 1986 against the OECD contemporaneous control trajectory.
  • Falsification rule: SUPPORTED if the US top-1 pre-tax share rises by at least 2 percentage points 1981-1986 AND the difference-in-differences against the OECD sample mean is positive at p<0.10. REFUTED if the US top-1 share fails to rise by 1 percentage point over the window or if the DiD coefficient is negative at p<0.10.

Estimate (Callaway-Sant'Anna staggered DiD, TWFE approximation)

  • coefficient: -8.93113795412367
  • std_error: 50.02150804978628
  • p_value: 0.858294233620522
  • n_obs: 51
  • n_countries: 4
  • r_squared_within: 0.9039411407821594
  • fe_entity: True
  • fe_time: True
  • cluster: country
  • method: Callaway-Sant'Anna TWFE fallback (linearmodels failed: No module named 'linearmodels')
  • n_treated_countries: 4
  • cohort_years: [1975, 1981, 1982]
  • dropped_controls_due_to_overlap: []

Variables resolved

  • owid:top-1-share-of-total-income → top_1pct_pretax_income_share (outcome, n=3294)
  • owid:top-10-share-of-total-income → top_10pct_pretax_income_share (outcome, n=3294)
  • owid:top-marginal-income-tax-rate → top_marginal_income_tax_rate (treatment, n=590)
  • world_bank_wdi:NY.GDP.PCAP.KD → log_real_gdp_per_capita (controls, n=14066)
  • world_bank_wdi:FP.CPI.TOTL.ZG → cpi_inflation (controls, n=9066)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, n=10714)

Missing data

  • constructed: indicator = 1 for USA, year >= 1982 (treatment)

Generated by scripts/run_did_callaway_santanna.py at 2026-04-30T12:29:38+00:00

Notes

Tax-inequality candidate from swarm-S6 batch 1. Distinct from the existing growth/reagan_tax_cuts_growth_effect spec (which targets output) and from TCJA/2017. Outcome here is distributional, not growth.

Authored framework. Read the transparency note.