Top Incomes Over the Twentieth Century by A. B. Atkinson;Thomas Piketty;

Author:A. B. Atkinson;Thomas Piketty; [Piketty;, A. B. Atkinson;Thomas]
Language: eng
Format: epub
ISBN: 9780199286881
Publisher: OxfordUP
Published: 1996-09-15T05:00:00+00:00

7.2 INCOME TAX DATA AND ESTIMATION METHODS

The tax unit in Australia is the individual. In what follows we take as the principal case that where the control population is that aged 15 and over, but also show the effects of taking those aged 20 and over. If taking an age cut-off of 20 gives a control total for population that is on the low side, and hence gives a lower bound on the share of the top X%, taking a cut-off of 15 will give a control total on the high side, and hence gives an upper bound. It could be argued that the definition should vary over time, but it is not clear which direction the variation should take. Young people enter the labour force later today than a century ago, which is an argument for raising the cut-off age over time. On the other hand, young people have been becoming economically independent earlier, and in their estimates of the UK distribution of wealth over the twentieth century, Atkinson and Harrison (1978) took an age cut-off falling from 23 in 1923 to 18 in 1973. We have therefore followed other authors in this volume and applied a constant age cut-off in determining the ‘adult’ population.

The coverage of the tax returns has varied greatly over the century. The fraction of Australians aged 15 and over who filed a tax return was around 11–12% in 1921–22. The figure then dropped to 5–7% in 1923–38, but the general trend was upwards. By the end of the Second World War, one-third of the adult population paid tax. Between 1950 and 2000, the fraction of the Australian population paying tax fluctuated between 50% and 62%.

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