Over the Top: How Tax Returns Show That the Very Rich Are Different from You and Me. Bourne, J. & Rosenmerkel, L. 2014. Unpublished manuscript![Over the Top: How Tax Returns Show That the Very Rich Are Different from You and Me [pdf]](https://bibbase.org/img/filetypes/pdf.svg "pdf")
Link abstract bibtex 2 downloads Deciphering the connections between income and wealth adds to our knowledge of the distribution of economic well-being. Realized income may reveal little about true economic status for the very wealthy, but additional information about the types and timing of income received may help clarify the underlying relationship between yearly income flows and overall wealth. Linked income and estate tax records provide an excellent data source to explore these issues. Our earlier work showed that portfolios differed significantly across wealth strata and that people with greater wealth tend to have smaller realized yields on their assets. This research used a unique data set that links together several years of income tax returns (Form 1040) for individuals who died between 1996 and 2002, as well as the Federal estate tax return (Form 706) where present. These persons were members of a panel representing the cohort of tax families (primary and secondary filers and their dependents) who filed Form 1040 in Tax Year 1987. We use subsets of these data to extend this line of research by: (1) better establishing the differences between decedents whose estates were required to file a Form 706 (F706 decedents) and those whose estates were not (non-F706 decedents), and (2) estimating wealth at the time of death from earlier income data using a Tobit model. Perhaps our most important finding is that, at best, income only imperfectly mirrors available economic resources. For some types of income– wages, pensions, and taxable interest income, for instance– the mirror is so dim as to be nearly obscured.
@unpublished{BourneRosenmerkel2014,
title = {Over the Top: How Tax Returns Show That the Very Rich Are Different from You and Me},
author = {Bourne, Jenny and Rosenmerkel, Lisa},
year = {2014},
url = {https://www.irs.gov/pub/irs-soi/14rpoverthetopbournerosenmerkel.pdf},
abstract = {Deciphering the connections between income and wealth adds to our knowledge of the distribution of economic well-being. Realized income may reveal little about true economic status for the very wealthy, but additional information about the types and timing of income received may help clarify the underlying relationship between yearly income flows and overall wealth. Linked income and estate tax records provide an excellent data source to explore these issues. Our earlier work showed that portfolios differed significantly across wealth strata and that people with greater wealth tend to have smaller realized yields on their assets. This research used a unique data set that links together several years of income tax returns (Form 1040) for individuals who died between 1996 and 2002, as well as the Federal estate tax return (Form 706) where present. These persons were members of a panel representing the cohort of tax families (primary and secondary filers and their dependents) who filed Form 1040 in Tax Year 1987. We use subsets of these data to extend this line of research by: (1) better establishing the differences between decedents whose estates were required to file a Form 706 (F706 decedents) and those whose estates were not (non-F706 decedents), and (2) estimating wealth at the time of death from earlier income data using a Tobit model. Perhaps our most important finding is that, at best, income only imperfectly mirrors available economic resources. For some types of income\textendash wages, pensions, and taxable interest income, for instance\textendash the mirror is so dim as to be nearly obscured.},
keywords = {Determinants of Wealth and Wealth Inequality},
note = {Unpublished manuscript}
}
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