Top Incomes in Germany over the Twentieth Century: 1891–1995

Please do not quote without checking with the author first This paper presents new homogeneous series on top income shares in Germany from 1891 to 1995 using tax returns data. The general pattern is consistent with recents results for France, i.e. the secular decline in income inequality is for the most part a capital income phenomenon. Very top incomes were badly hurt by the majors shocks of the 1914-1945 period and never recovered afterwards possibly because of the rise in progressive taxation. Since 1945, top income shares have been relatively stable, with no rise during the recent years (unlike in the U.S.). The striking episode before WWII is how nazi power brought top income shares to almost double within five years. The striking result after WWII is that German top incomes are more concentrated within the top decile than in other industrialized countries. Thus the German super rich were richer than their American counterparts until the late 1980’s