Recent Trends in US Income Distributions in Tax Record Data Using More Comprehensive Measures of Income Including Real Accrued Capital Gains—Larrimore 2021

IRS tax records help researchers track income trends, but focusing on taxable market income excludes important income sources. We explore the effect of measuring inequality levels and trends with income, including real accrued capital gains based on Haig-Simons principles. Using our Haig-Simons-based measure, median economic income rose 26% from 1989 to 2016. Top 1% income shares were lower and increased by only one-third of what was estimated using previous methods.

Larrimore, J., Burkhauser, R. V., Auten, G., & Armour, P. (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, 129(5), 1319–1360. https://doi.org/10.1086/713098