Recent Trends in Top Income Shares in the United States: Reconciling Estimates from March CPS and IRS Tax Return Data

Abstract

Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau. All results have been reviewed to ensure that no confidential information is disclosed. the referees, for their helpful comments and suggestions on earlier versions of this paper. Abstract Although most research on US income inequality trends is based on public-use March CPS data, a new wave of research using IRS tax return data reports substantially higher levels of inequality and faster growing trends for recent years. We show that these apparently inconsistent estimates are largely reconciled when the income distribution and inequality are defined in the same way. Using internal CPS data for 1967-2006, we show that estimates of top income shares based on internal CPS data for 1967-2006 are similar in many respects to the IRS data-based estimates reported by Piketty and Saez (2003). Our results imply that changes in US income inequality since 1993 are largely driven by changes in the share of the top 1 percent.

Economic Analysis and Statistical Disclosure Limitation

“…Notice that the SDL affected both the mean and the standard error of the estimate. Burkhauser et al (2012) provide a simple, vivid example of the consequences of SDL for economic analysis. Because of SDL, changes in the upper tail of the income distribution are largely hidden from view in research based on public-use microdata, most often the CPS.…”

O Topo da Distribuição de Renda no Brasil: Primeiras Estimativas com Dados Tributários e Comparação com Pesquisas Domiciliares (2006-2012)

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“…In addition, more complex functional forms might be used (Clauset et al, 2009, Burkhauser et al, 2012, Brzezinski, 2013). Yet, the problem of biased wealth concentration remains if top wealth households are substantially underrepre-3 sented in survey data.…”