Recent Trends in U.S. Top Income Shares in Tax Record Data Using More Comprehensive Measures of Income Including Accrued Capital Gains

Jeff Larrimore, Richard Burkhauser, Gerald Auten and Philip Armour

No 23007, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Access to IRS personal income tax records improves researchers’ ability to track U.S. income and inequality, especially at the very top of the distribution (Piketty and Saez 2003). However, rather than following standard Haig-Simons income definitions, tax form income measures were designed to implement the Internal Revenue Code. Using IRS tax record data since 1989 statistically matched to Survey of Consumer Finances and Census data for income sources not available in tax data, we explore the robustness of levels and trends in inequality using the top income literature’s tax return market income definition (Saez 2016) compared to more comprehensive income measures. We find that focusing solely on market income misses the important redistributive effects of government taxes and transfers. In addition, we find that the use of taxable realized capital gains changes the level and trend in top incomes relative to an accrued capital gains measure that is more consistent with Haig-Simons income definitions.

JEL-codes: D31 H24 J3 (search for similar items in EconPapers)
Date: 2016-12
New Economics Papers: this item is included in nep-lma and nep-pbe
Note: PE
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Citations: View citations in EconPapers (6)

Published as Journal of Political EconomyVolume 129, Number 5

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