Dating income disparity

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For the population that files tax returns and for the categories of income that get reported, these administrative data are generally more accurate and more complete than survey data, such as the CPS, which is prone to underreporting of some kinds of income.

However, not all people are required to file tax returns, and tax returns do not reflect all sources of income.

Those who do not file returns are likely to have limited incomes; hence tax data do not provide a representative view of low-income households (the mirror image of inadequate coverage of high-income households in the CPS).

Like Census money income, income reported on tax returns excludes non-cash benefits such as food stamps, housing subsidies, Medicare, Medicaid, and non-taxable employer-provided fringe benefits.

SOI tax data are also less timely than Census data.

Final statistics for tax year 2015 were released in September 2017.The income tax data used in distributional analysis come from a large sample of tax returns compiled by the IRS’s Statistics of Income Division.For 2015, the sample consisted of about 339,000 returns scientifically selected from the roughly 150 million returns filed that year.The most widely used sources of data and statistics on household income and its distribution are the annual survey of households conducted as part of the Census Bureau’s Current Population Survey (CPS) and the Internal Revenue Service’s (IRS) Statistics of Income (SOI) data compiled from a large sample of individual income tax returns.The Census Bureau publishes annual reports on income, poverty, and health insurance coverage in the United States based on the CPS data, the SCF is more valuable as the best source of survey data on wealth.Equivalence adjustment takes into account the fact that larger families need more total income but less per capita income than smaller families because they can share resources and take advantage of economies of scale.In recent reports, Census has supplemented its measures of income inequality based on household money income with estimates based on equivalence-adjusted income.The ASEC, also called the March CPS, provides information about the total annual resources available to families — including income from earnings, dividends, and cash benefits (such as Social Security), as well as the value of tax credits such as the Earned Income Tax Credit (EITC) and non-cash benefits such as nutritional assistance, Medicare, Medicaid, public housing, and employer-provided fringe benefits.The income measure used in the Census report is money income before taxes, and the unit of analysis is the household.The latest data, for 2016, were released in September 2017.The statistics on household income are available going back to 1967.

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