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Recent Income Trends for Top Executives: Evidence From Tax Return Data

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  • Seth H. Giertz
  • Jacob A. Mortenson

Abstract

We examine income trends for top executives, focusing on the years 2000 to 2010, with special emphasis on the period surrounding the Great Recession. First, we merge Execucomp executive compensation records with IRS tax records. We compare incomes from our Execucomp sample to top incomes reported by Piketty and Saez (2003). We disaggregate executive income trends by industry, showing which industries are driving the divergence in top executive incomes. We compare our results to findings from Bakija, Cole, and Heim (2010) and Kaplan and Rauh (2010), who examine trends in top incomes for broad occupation and industry categories for years prior to the Great Recession. We also decompose these income trends by income source to see which components are driving the observed changes. We find that stock options are by far the most volatile component of executive pay. Options are the key driver of both short-term swings and longer-term trends in top executive pay. However, stock awards are also a large and growing component. We find much greater variation in income across years than across industries. Executive incomes are most volatile at the very top of income distribution. In general, trends for top executives in finance and non-finance industries are quite similar; however; for those above the 99.9th percentile of the income distribution, the decline in income from 2006 to 2009 was much more pronounced for executives in finance.

Suggested Citation

  • Seth H. Giertz & Jacob A. Mortenson, 2013. "Recent Income Trends for Top Executives: Evidence From Tax Return Data," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(4), pages 913-938, December.
  • Handle: RePEc:ntj:journl:v:66:y:2013:i:4:p:913-938
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    References listed on IDEAS

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    Cited by:

    1. Neisser, Carina, 2017. "The elasticity of taxable income: A meta-regression analysis," ZEW Discussion Papers 17-032, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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