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Measuring Top Incomes Using Tax Record Data: A Cautionary Tale from Australia

  • Richard V. Burkhauser

    ()

    (Department of Policy Analysis and Management, Cornell University; and Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Markus H. Hahn

    ()

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Roger Wilkins

    ()

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Atkinson, Piketty, and Saez (2011) survey an important new literature using income taxbased data to measure the share of income held by top income groups. But changes in tax legislation that expand the tax base to include income sources (e.g. capital gains, dividends, etc.) disproportionately held by these groups will conflate such an expansion with an increase in the share of income they hold. We provide a cautionary tale from Australia of how comprehensive tax reform legislation in 1985 substantially altered Australian top income series, especially those that do not separate taxable realized capital gains from other taxable income.

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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2013n24.

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Length: 72pp
Date of creation: Jun 2013
Date of revision:
Handle: RePEc:iae:iaewps:wp2013n24
Contact details of provider: Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
Phone: +61 3 8344 2100
Fax: +61 3 8344 2111
Web page: http://www.melbourneinstitute.com/
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  1. Richard V. Burkhauser & Jeff Larrimore & Kosali I. Simon, 2011. "A "Second Opinion" on the Economic Health of the American Middle Class," NBER Working Papers 17164, National Bureau of Economic Research, Inc.
  2. Philip Armour & Richard V. Burkhauser & Jeff Larrimore, 2013. "Deconstructing Income and Income Inequality Measures: A Crosswalk from Market Income to Comprehensive Income," American Economic Review, American Economic Association, vol. 103(3), pages 173-77, May.
  3. Anthony B. Atkinson & Andrew Leigh, 2007. "The Distribution of Top Incomes in Australia," The Economic Record, The Economic Society of Australia, vol. 83(262), pages 247-261, 09.
  4. Nicole Watson & Mark Wooden, 2010. "The HILDA Survey: Progress and Future Developments," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(3), pages 326-336.
  5. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality In The United States, 1913-1998," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 1-39, February.
  6. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
  7. Mark Wooden & Nicole Watson, 2007. "The HILDA Survey and its Contribution to Economic and Social Research (So Far)," The Economic Record, The Economic Society of Australia, vol. 83(261), pages 208-231, 06.
  8. James M. Poterba, 1993. "Tax Policy and the Economy, Volume 7," NBER Books, National Bureau of Economic Research, Inc, number pote93-1, October.
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