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

Author

Listed:
  • Nishant Yonzan

    (Graduate Center, City University of New York)

  • Branko Milanovic

    (City University of New York)

  • Salvatore Morelli

    (University of Roma Tre)

  • Janet Gornick

    (City University of New York)

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% 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% incomes.

Suggested Citation

  • Nishant Yonzan & Branko Milanovic & Salvatore Morelli & Janet Gornick, 2022. "Drawing a Line: Comparing the Estimation of Top Incomes between Tax Data and Household Survey Data," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(1), pages 67-95, March.
    • Handle: RePEc:spr:joecin:v:20:y:2022:i:1:d:10.1007_s10888-021-09515-5
    DOI: 10.1007/s10888-021-09515-5
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    2. Yonatan Berman, 2022. "Absolute intragenerational mobility in the United States, 1962–2014," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(3), pages 587-609, September.
    3. Assouad, Lydia, 2023. "Rethinking the Lebanese economic miracle: The extreme concentration of income and wealth in Lebanon, 2005–2014," Journal of Development Economics, Elsevier, vol. 161(C).

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    More about this item

    Keywords

    Income; Inequality; Survey data; Tax data;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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