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
Additional contact information
Nishant Yonzan: CUNY Graduate Center
Janet Gornick: Stone Center on Socio-economic Inequality and CUNY Graduate Center

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

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 differences 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.

Keywords: Income; Inequality; Survey Data; Tax Data. (search for similar items in EconPapers)
JEL-codes: D31 (search for similar items in EconPapers)
Date: 2021-01-28
New Economics Papers: this item is included in nep-eur
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Citations: View citations in EconPapers (2)

Published in the Journal of Economic Inequality, 2022

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http://www.csef.it/WP/wp600.pdf (application/pdf)

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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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:600

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