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The Suitability of Tax Data to Study Trends in Inequality. A Theoretical and Empirical Review with Tax Data from Switzerland

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Listed author(s):
  • Oliver Hümbelin

    ()

  • Rudolf Farys

    ()

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    Abstract

    In many countries results of inequality trends are ambiguous, because different methodological approaches blur the picture or because reliable data are not available. In this paper we assess whether tax data are suitable for inequality trend analysis. We do this by comparing tax data measurement concepts concerning income definition, statistical units and population coverage to theoretical ideal concepts. To get a sense of direction and magnitude of potential biases, we estimate the impact of tax data-related methodological options for inequality measures with Swiss tax data. Where possible and meaningful, we compare tax data results to corresponding results from surveys. While there are clear advantages of tax data like long-term availability and reliable population coverage in more recent years, there are also drawbacks that lead to an overestimation of inequality and hinder comparability over time. In sum, tax data are a source that should be used with care, but nonetheless seem to be indispensable for inequality analysis. As a substantive result for Switzerland, our tax data analysis raises doubts about the declining inequality trend reported by survey data for the last decades.

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    File URL: http://repec.sowi.unibe.ch/files/wp16/Huembelin-Farys-Taxdata-2015.pdf
    File Function: First version, 2015
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    Paper provided by University of Bern, Department of Social Sciences in its series University of Bern Social Sciences Working Papers with number 16.

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    Length: 28 pages
    Date of creation: 30 Nov 2015
    Handle: RePEc:bss:wpaper:16
    Contact details of provider: Web page: http://www.sowi.unibe.ch/

    Keywords: Tax Data; Inequality Trend; Income Distribution; Switzerland;

    Find related papers by JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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