Drawing a Line: Comparing the Estimation of Top Incomes Between Tax Data and Household Survey Data

Nishant Yonzan (), Branko Milanovic, Salvatore Morelli and Janet Gornick

No 805, LIS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: The paper uses the flexibility of household survey data to align their income categories and recipient units with the income categories and units found in data produced by tax authorities. Our analyses, based on a standardized definition of fiscal income, allow us to locate, for top-income groups, the sources of discrepancy. We find, using the cases of the United States, Germany, and France, that the results from survey-based and tax data correspond extremely well (in terms of total income, mean income, composition of income, and income shares) above the 90th percentile and up to the top 1 percent of the distribution. Information about income composition, available in the US, allows us to investigate the determinants of this gap in the US. About three-fourths of the tax/survey gap is due to di˙erences in non-labor incomes, especially self-employment (business) income. The gap itself may be due to tax-induced re-classification of income from corporate to personal or/and to lower ability of surveys to capture top 1 percent incomes.

JEL-codes: D31 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2021-10
New Economics Papers: this item is included in nep-eur and nep-isf
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Citations: View citations in EconPapers (2)

Published in Journal of Economic Inequality, 20, (2022): 67–95. https://doi.org/10.1007/s10888-021-09515-5

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Related works:
Journal Article: Drawing a Line: Comparing the Estimation of Top Incomes between Tax Data and Household Survey Data (2022)
Working Paper: Drawing a Line Comparing the Estimation of Top Incomes Between Tax Data and Household Survey Data (2021)
Working Paper: Drawing a Line: Comparing the Estimation of Top Incomes Between Tax Data and Household Survey Data (2020)
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