
Contents
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7.1 Introduction 7.1 Introduction
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7.2 Methodology 7.2 Methodology
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7.2.1 Data 7.2.1 Data
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7.2.2 Measuring Income 7.2.2 Measuring Income
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7.2.3 Incidence of Federal Taxes 7.2.3 Incidence of Federal Taxes
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7.2.4 Adjusting for Household Size 7.2.4 Adjusting for Household Size
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7.3 Limitations of the Analysis 7.3 Limitations of the Analysis
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7.3.1 Annual Income 7.3.1 Annual Income
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7.3.2 Capital Gains and Pensions 7.3.2 Capital Gains and Pensions
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7.3.3 State and Local Taxes 7.3.3 State and Local Taxes
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7.3.4 Misreporting of Transfer Income 7.3.4 Misreporting of Transfer Income
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7.4 The Distribution of Household Income 7.4 The Distribution of Household Income
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7.4.1 The Distribution of Income after Federal Taxes and Transfers 7.4.1 The Distribution of Income after Federal Taxes and Transfers
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7.4.2 The Distribution of Market Income 7.4.2 The Distribution of Market Income
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Decomposing Changes in Market Income Inequality by Income Source Decomposing Changes in Market Income Inequality by Income Source
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7.4.3 Income Changes for the Top 1 Percent of the Population 7.4.3 Income Changes for the Top 1 Percent of the Population
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7.5 The Effect of the Tax and Transfer System on Income Inequality 7.5 The Effect of the Tax and Transfer System on Income Inequality
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7.5.1 Government Transfer Payments 7.5.1 Government Transfer Payments
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7.5.2 Federal Taxes 7.5.2 Federal Taxes
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Average Federal Tax Rates Average Federal Tax Rates
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Progressivity of Federal Taxes Progressivity of Federal Taxes
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Progressivity of Federal Taxes by Source Progressivity of Federal Taxes by Source
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7.6 Conclusions 7.6 Conclusions
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References References
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12 Toward the Development of Sectoral Financial Positions and Flows in a From-Whom-to-Whom Framework
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7 Trends in the Distribution of Household Income, 1979–2010
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Published:October 2014
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Abstract
Numerous studies have found that the distribution of income in the United States has become increasingly unequal—in particular, the share of income accruing to the highest-income households has increased, whereas the share accruing to other households has declined. The primary source for information on the income distribution in the United States is the Annual Social and Economic Supplement to the Census Bureau’s Current Population Survey (CPS). In an influential paper, Thomas Piketty and Emmanuel Saez employed an alternative method, using data from tax returns to examine market income inequality in the United States over almost a century. Each of those data sources has strengths and limitations. This paper presents estimates of the distribution of household income in the United States, derived from a statistical combination of data from the Current Population Survey and from samples of income tax returns. This combined series overcomes some limitations of estimates produced from either the CPS or the income tax data alone: it covers the full population while maintaining the richness at the top of the income distribution, and can yield comprehensive estimates of the effect of the tax and transfer system on the full income distribution.
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