Constructing a Panel of Income and Estate Tax Data for Wealthy Individuals: Creativity and Compromise

• Activity Number: 408
• Type: Topic Contributed
• Date/Time: Wednesday, August 9, 2006 : 10:30 AM to 12:20 PM
• Sponsor: Section on Government Statistics
• Author(s): Barry Johnson*+ and Lisa Schreiber
• Companies: Internal Revenue Service and Internal Revenue Service
• Keywords: panel ; unit non-response ; non-sampling error ; sample weight adjustment

Abstract

The Statistics of Income Division of the IRS created a longitudinal panel of income tax filers beginning in 1987, including returns for the primary filing unit and dependents. Beginning in 1995, SOI began collecting data from federal estate tax returns for individuals in the original 1987 income panel. This paper will document efforts to construct and use the income/estate tax panel. Specifically, it will examine the effects of missing returns (a form of unit nonresponse), data quality issues (nonsampling error), and changes in the filing tax unit---all of which pose complex sample weight issues. Preliminary estimates from this file will be used to illustrate the effects of decisions made in constructing the panel, with particular attention given to the trade-off between longitudinality and population coverage that is often a problem in panel datasets.