Upper tail of the income distribution in tax records and survey data. Evidence from Poland

Abstract

Growing interest in the situation of the rich and in changes in the upper tail of the income distribution entails search for specialized sources of data. The majority of available data come from surveys, which are burdened with the problem of the reluctance of the rich to reveal their income and assets. This is the incentive to look for alternative data sources. One of such sources are tax records. Irrespective of their credibility (limited by tax avoidance and tax evasion), the crucial feature of data collected by tax offices is its completeness for the population of taxpayers: refusal to file a tax return or providing false information is punishable by law.The paper compares the data gathered within the Household Budget Survey, which is commonly used for research and administrative purposes in Poland, with the complete dataset of tax records for Dolnośląskie province (over 2 million taxpayers). Analyses show large discrepancies in the results obtained for both datasets in the upper tail of the income distribution. The observed differences are important for the proper assessment of the actual situation of the rich.

Between communism and capitalism: long-term inequality in Poland, 1892–2015

“…In our accompanying work in progress (Bukowski et al, 2021 ) we show that the above methodology produced series on income inequality remarkably similar to those based on the registry database of the universe of individual-level tax returns for the period 2004–2017 (see also Kośny, 2019 for Lower Silesia).…”

Polish inequality statistics reconsidered: are the poor really that poor?

“…More methodological details on Polish HBS may be found in Główny Urząd Statystyczny -Statistics Poland (2015). For a brief description of the tax data in Poland applicable to this study see Kośny (2019).…”

“…For a comprehensive discussion of household survey measurement errors see Moore et al (2000) and Kasprzyk (2005), while nonresponse issues are discussed in Lepkowski (2005). A discussion of the Polish household survey data quality may be found in Kośny (2019). Generally, two approaches to handling the data errors in research on inequality and poverty may be observed in the literature.…”

Reevaluating Distributional Consequences of the Transition to Market Economy in Poland: New Results from Combined Household Survey and Tax Return Data

“…8 We use the modified OECD equivalence scale. 9 Kośny (2019) provides top income shares estimated from individual tax returns for Lower Silesian Voivodeship in Poland. 10 Information from individual tax returns from Poland is not at present available to researchers.…”