IESET.
Hypotheses·distribution·tax_inequality_bush_2003_dividend_capgains_cut

The 2003 Jobs and Growth Tax Relief Reconciliation Act (JGTRRA), which cut US qualified-dividend and long-term-capital-gains rates to 15 percent, shifted the composition of top-1 pre-tax income toward dividend and capital-gains realisations between 2003 and 2007, raising the top-1 share by 1.5 to 3 percentage points relative to the pre-2003 trend.

The discriminating test is the dividend-share component of top-decile income pre vs post 2003 against the wage-share component.

PARTIALengine/runs/tax_inequality_bush_2003_dividend_capgains_cut

PARTIAL — shape=ITS, opposite sign but small (mean_gap=-0.6187, z=-1)

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. shape=ITS, opposite sign but small (mean_gap=-0.6187, z=-1)

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 1 country or place units from 1995 to 2010, using a event study design, with fixed effects for year.

what was measured
What changed
  • Jgtrra 2003 post indicator
  • Dividend tax rate top qualified
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_bush_2003_dividend_capgains_cut
1007550250199520032010USA
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show top_1pct_pretax_income_share across 1 sampled countries over 1995–2010.
The shapes above are stylised — none of the lines are real data.
Placeholder for tax_inequality_bush_2003_dividend_capgains_cut. Published chart will be generated from engine/runs/tax_inequality_bush_2003_dividend_capgains_cut/chart_data.json.

Pre-registration

pre-registered
first-spec commit 098ce96 · 2026-04-30T12:57:33Z
run generated · 2026-04-30T12:29:39Z

The 2003 Jobs and Growth Tax Relief Reconciliation Act (JGTRRA), which cut US qualified-dividend and long-term-capital-gains rates to 15 percent, shifted the composition of top-1 pre-tax income toward dividend and capital-gains realisations between 2003 and 2007, raising the top-1 share by 1.5 to 3 percentage points relative to the pre-2003 trend. The discriminating test is the dividend-share component of top-decile income pre vs post 2003 against the wage-share component.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

SUPPORTED if dividend share of top-decile income rises by at least 2 percentage points 2002-2007 AND the difference between top-1 share growth and bottom-90 share growth widens by at least 1pp at p<0.10. REFUTED if dividend-share shift is below 1 percentage point or the top-vs-bottom growth gap fails to widen at p<0.10.

formal test & threshold
test:      US time-series decomposition of top-decile income by form (wages vs dividends vs capital gains) around the 2003 break, with placebo on 2001 EGTRRA.

Method

Template
event_study
Fixed effects
year
Clustering
year
Sample
1 countries · 1995 – 2010
Evidence type
associational

Event study around 2003Q2 break (JGTRRA effective). Placebo on 2001Q3 EGTRRA. Robustness with local_projections.

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
jgtrra_2003_post_indicator
treatment
constructed:indicator = 1 for year >= 2003tier 5
indicator
dividend_tax_rate_top_qualified
treatment
owid:top-marginal-income-tax-ratetier 2
level
log_real_gdp
control
fred:GDPC1tier 1
log
federal_funds_rate
control
fred:FEDFUNDStier 1
level
equity_index_real_yoy
control
fred:SP500tier 1
real_yoy_pct_change

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — tax_inequality_bush_2003_dividend_capgains_cut

Verdict: PARTIAL — shape=ITS, opposite sign but small (mean_gap=-0.6187, z=-1)

Pre-registration

  • Claim: The 2003 Jobs and Growth Tax Relief Reconciliation Act (JGTRRA), which cut US qualified-dividend and long-term-capital-gains rates to 15 percent, shifted the composition of top-1 pre-tax income toward dividend and capital-gains realisations between 2003 and 2007, raising the top-1 share by 1.5 to 3 percentage points relative to the pre-2003 trend. The discriminating test is the dividend-share component of top-decile income pre vs post 2003 against the wage-share component.
  • Falsification rule: SUPPORTED if dividend share of top-decile income rises by at least 2 percentage points 2002-2007 AND the difference between top-1 share growth and bottom-90 share growth widens by at least 1pp at p<0.10. REFUTED if dividend-share shift is below 1 percentage point or the top-vs-bottom growth gap fails to widen at p<0.10.
  • Falsification test: US time-series decomposition of top-decile income by form (wages vs dividends vs capital gains) around the 2003 break, with placebo on 2001 EGTRRA.
  • Event year: 2003

Estimate

  • shape: single_country_its
  • country: USA
  • event_year: 2003
  • n_pre: 8
  • n_post: 8
  • pre_trend_slope: 0.264523809523801
  • pre_trend_intercept: -512.5408333333164
  • pre_residual_sd: 0.6036721527677198
  • end_year: 2010
  • end_year_actual: 17.89
  • end_year_counterfactual: 19.152023809523598
  • end_year_gap: -1.2620238095235976
  • mean_post_gap: -0.6186904761902974
  • z_end: -2.090578145335118
  • z_mean: -1.0248782776441177
  • post_period_years: [2003, 2010]

Variables resolved

  • owid:top-1-share-of-total-income → top_1pct_pretax_income_share (outcome, publisher=owid, n=3294)
  • owid:top-10-share-of-total-income → top_10pct_pretax_income_share (outcome, publisher=owid, n=3294)
  • owid:top-marginal-income-tax-rate → dividend_tax_rate_top_qualified (treatment, publisher=owid, n=590)
  • fred:GDPC1 → log_real_gdp (controls, publisher=fred, n=79)
  • fred:FEDFUNDS → federal_funds_rate (controls, publisher=fred, n=73)
  • fred:SP500 → equity_index_real_yoy (controls, publisher=fred, n=11)

Variables missing data

  • constructed: indicator = 1 for year >= 2003 (treatment, name=jgtrra_2003_post_indicator)

Generated by scripts/run_event_study.py at 2026-04-30T12:29:39+00:00

Notes

Tax-inequality candidate, swarm-S6 batch 1. Decomposition exploits SCF + WID income-form composition.

Authored framework. Read the transparency note.