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Recent Trends in US Income Distributions in Tax Record Data Using More Comprehensive Measures of Income Including Real Accrued Capital Gains

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  • Jeff Larrimore
  • Richard V. Burkhauser
  • Gerald Auten
  • Philip Armour

Abstract

Use of Internal Revenue Service (IRS) tax records improves researchers’ ability to track income trends, although the focus on taxable market income in this research excludes important income sources. Using IRS data in combination with other data sources, we explore the effect of measuring inequality levels and trends with income, including real accrued capital gains based on Haig-Simons principles. While median market income fell 10% from 1989 to 2016, median economic income increased by 26% using our Haig-Simons-based measure. Top 1% income shares were lower and increased by only about one-third of that estimated using previous approaches over this period.

Suggested Citation

  • Jeff Larrimore & Richard V. Burkhauser & Gerald Auten & Philip Armour, 2021. "Recent Trends in US Income Distributions in Tax Record Data Using More Comprehensive Measures of Income Including Real Accrued Capital Gains," Journal of Political Economy, University of Chicago Press, vol. 129(5), pages 1319-1360.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/713098
    DOI: 10.1086/713098
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    Citations

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    Cited by:

    1. Rolf Aaberge & Marco Francesconi & Jørgen Modalsli & Ola L. Vestad, 2024. "How Business Income Measures Affect Income Inequality and the Tax Burden," CESifo Working Paper Series 11496, CESifo.
    2. Lukas Riedel & Holger Stichnoth, 2024. "Government consumption in the DINA framework: allocation methods and consequences for post-tax income inequality," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(3), pages 736-779, June.
    3. Di Caro, Paolo & Figari, Francesco & Fiorio, Carlo & Manzo, Marco & Riganti, Andrea, 2022. "One step forward and three steps back: pros and cons of a flat tax reform," MPRA Paper 113684, University Library of Munich, Germany.
    4. Smith, V. Kerry, 2021. "A note on income inequality at the state level," Economics Letters, Elsevier, vol. 203(C).
    5. Barış Kaymak & David Leung & Markus Poschke, 2022. "Accounting for Wealth Concentration in the United States," Working Papers 22-28, Federal Reserve Bank of Cleveland.
    6. Martin Ravallion, 2022. "Missing Top Income Recipients," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(1), pages 205-222, March.
    7. Corinth, Kevin & Larrimore, Jeff, 2024. "Has Intergenerational Progress Stalled? Income Growth over Five Generations of Americans," IZA Discussion Papers 16807, Institute of Labor Economics (IZA).
    8. Dmitry Petrov & Marina Romaguera-de-la-Cruz, 2023. "Measuring economic insecurity with a joint income-wealth approach," Working Papers 637, ECINEQ, Society for the Study of Economic Inequality.
    9. Roth, Steve & Bezemer, Dirk, 2024. "Introducing the THIAs: Total Haig-Simons U.S. Household Income Accounts, 1960–2021," MPRA Paper 121242, University Library of Munich, Germany.
    10. Kevin C. Corinth & Jeff Larrimore, 2024. "Has Intergenerational Progress Stalled? Income Growth Over Five Generations of Americans," Finance and Economics Discussion Series 2024-007, Board of Governors of the Federal Reserve System (U.S.).
    11. Luis Ayala & Ana Pérez & Mercedes Prieto-Alaiz, 2022. "The impact of different data sources on the level and structure of income inequality," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 13(3), pages 583-611, September.
    12. David Gunawan & William E. Griffiths & Duangkamon Chotikapanich, 2021. "Posterior Probabilities for Lorenz and Stochastic Dominance of Australian Income Distributions," The Economic Record, The Economic Society of Australia, vol. 97(319), pages 504-524, December.
    13. Vincent Geloso & Alexis Akira Toda, 2024. "Pareto's Limits: Improving Inequality Estimates in America, 1917 to 1965," Papers 2408.16861, arXiv.org.

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