Administrative tax data indicate that U.S. top income and wealth shares are substantial and increasing rapidly (Piketty andSaez 2003, Saez andZucman 2014). A key reason for using administrative data to measure top shares is to overcome the under-representation of families at the very top that plagues most household surveys. However, using tax records alone restricts the unit of analysis for measuring economic resources, limits the concepts of income and wealth being measured, and imposes a rigid correlation between income and wealth. The Survey of Consumer Finances (SCF) solves the under-representation problem by combining administrative and survey data (Bricker et al, 2014). Administrative records are used to select the SCF sample and verify that high-end families are appropriately represented, and the survey is designed to measure comprehensive concepts of income and wealth at the family level. The SCF shows high and rising top income and wealth shares, as in the administrative tax data. However, unadjusted, the levels and growth based on administrative tax data alone appear to be substantially larger. By constraining the SCF to be conceptually comparable, we reconcile the differences, and show the extent to which restrictions and rigidities needed to estimate top income and wealth shares in the administrative data bias up levels and growth rates.
JEL Codes: D31, D63, H21 Board of Governors of the Federal Reserve System, Washington, DC.2 Corresponding author, jesse.bricker@frb.gov. The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors. We would like to thank our colleagues on the SCF project who made this research possible: Lisa Dettling, Sebastian Devlin-Foltz, Joanne Hsu, Kevin B. Moore, Sarah Pack, Max Schmeiser, Jeff Thompson, and Richard Windle. We also thank Diana Hancock, Arthur Kennickell, Wojciech Kopczuk, Victor Rios-Rull, Emmanuel Saez, Gabriel Zucman, and seminar participants at the Federal Reserve Board, the Bank of England, the Bank of Spain, and the HFCN meeting at the European Central Bank for input and comments on earlier versions of this paper. The corresponding author also thanks Olympia Bover and the Bank of Spain for hospitality at the early stages of this paper. Finally, we are grateful to Michael Parisi for providing SOI income growth rate tabulations and to Barry Johnson and the SOI staff for contributions to the SCF sample design.