Top Incomes and Inequality in Australia: Reconciling Recent Estimates from Household Survey and Tax Return Data

Richard Burkhauser, Markus Hahn and Roger Wilkins ()

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: We systematically compare differences in recent Australian income inequality estimates derived from tax records and survey data. We use customised tax tables provided by the Australian Taxation Office (ATO) to more precisely measure Australian top incomes as conceptualised in the international top incomes literature. We then document the inability of Household, Income and Labour Dynamics in Australia (HILDA) survey data, as well as the ATO 1% sample tax files, to replicate our top income share values. In contrast, accuracy is substantially improved using the ATO 2% sample introduced in 2011-12. Using HILDA data with enhanced income values from the 2% sample we better track top incomes. More importantly, we are able to use alternative income concepts and income-sharing units to provide more consistent cross-national comparisons than are currently found in the top incomes literature. Furthermore, we improve standard summary measure estimates of inequality found in the traditional survey-based Australian literature. Our findings show great potential value in linking tax records and survey data, but also show that this value is severely limited when using the 1% tax sample available for 2003-04 to 2010-11. Whereas the 2% sample substantially improves top incomes estimates, data without censored and perturbed income variables are needed and could be provided without unduly threatening tax filer confidentiality.

Keywords: Inequality; summary income inequality measures; top income share measures; Australian tax records data; HILDA Survey data (search for similar items in EconPapers)
JEL-codes: C81 D31 (search for similar items in EconPapers)
Pages: 43pp
Date: 2016-06
New Economics Papers: this item is included in nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://melbourneinstitute.unimelb.edu.au/downloads ... series/wp2016n19.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2016n19

Access Statistics for this paper

More papers in Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia. Contact information at EDIRC.
Bibliographic data for series maintained by Sheri Carnegie ().