Top Incomes by Atkinson A. B.; Piketty Thomas;

Author:Atkinson, A. B.; Piketty, Thomas;
Language: eng
Format: epub
Publisher: Oxford University Press, Incorporated

Reference Total Income

In constructing our reference total income we have used three basic approaches. The first two are based on that we can arrive at the ‘Preferred Total Income Definition’ either by (1) starting with ‘Total Personal Sector Income’ and deducting items not included in our preferred definition, or (2) starting from the ‘Tax Statistics Income’ and adding items not included in the tax base and income estimates for individuals not included in the tax statistics. The third—which is mainly included as a point of reference—is based on the assumption that our preferred income total can be approximated as a fixed share of GDP.

Starting with the first approach, we need homogeneous estimates of ‘Total Personal Sector Income’ from which we want to deduct items not included in our preferred definition of total income. The best homogeneous National Accounts series which span the whole period which we study are those by Edvinsson (2005). These, however, contain only aggregate series for Wages and salaries of employees (including social benefits) and Imputed labour income of self-employed (including social benefits). To these we have added aggregate capital income and property income reported in the tax statistics giving us an estimate of ‘Personal sector total income’.72 This, hence, becomes:

Wages and salaries of employees (including social benefits) (from Edvinsson 2005)

+ Imputed labour income of self-employed (incl. social benefits) (from Edvinsson 2005)

+ individual capital income (from Taxeringarna. . . , 1922–88, and corresponding sources thereafter, and estimated before 1922)

+ individual property income (same as for capital income above)

= Estimated ‘Personal sector total income’

This estimate fluctuates around 0.7 times GDP (calculated from the expenditure side, reported in Edvinsson 2005) with a standard deviation of 0.03.

Starting from the tax statistics income we use the following method to get at our preferred reference total for income:

Tax statistics income (the aggregates from the same sources as the income statistics described above, sometimes corrected for wealth shares)

+ items not included in the tax base (we make the assumption that all important sources of income including certain social security benefits are included in the tax base after 1974 (hence abstracting from child allowances, allmänt barnbidrag, and study grants, studiebidrag, which are tax free) and add aggregate government expenditures for unemployment benefits (arbetslöshetsersättning), payments for sick leave (sjukpenning), and payments for mothers (moderskapsförsäkring, which in 1974 was replaced by ‘parenthood insurance’, föröldrarförsäkring, which was taxed) based on figures in the Statistical Yearbook of Sweden 1948– (before they are not listed but can be assumed to be a small share)

+ estimated income for ‘non-filers’ (in our preferred specification we take (reference population—tax filers) × (0.8 times the tax threshold). As an alternative specification we use 0.25 times the average income of tax filers)

= ‘Preferred reference total’ (starting from the tax statistics income)

Figure 7C.3 shows the alternative specifications over the whole period as shares of GDP, as well as in relation to 0.63 times GDP. What we can say with some certainty is that the estimate of ‘Personal sector total income’ is an overestimate of our preferred reference total.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.