Taxation, Debt Liability and Ownership by Race
Explanatory Notes
The Brookings-Urban Tax Policy Center released its Feature on Racial Disparities and the Income Tax System January 30, 2020. These notes accompany our study on how taxes, debt liability and debt ownership are spread by race. Data sources are the Federal Reserve Consumer Finance Survey (2016), the 2017 tax distribution figures in the 2019 IRS SOI Data Book and the Census/BLS Household Current Population Survey Table HC01.
Racial groupings selected were Whites Only, Black AOIC (which may double count Latinos), Latinos of all races and Asian AOIC. No mix got close to the 125,000-household figure in HC-01, but the percentages do reflect the TPC graphic on Tax Burden. The first release of our table attempted to reconcile total income distribution, distribution among the top 10% and the bottom 90%, which were applied to the IRS Data. The numbers did not add up. Further analysis of the HC01 data was required.
HC01 data was weighted by income tax estimates. The mean value estimator for the bottom 90% ($145,000 and below) was 79% of the stated income brackets. Between $145,000 and $200,000, the mean estimator was 65%. These figures were based on the AGI estimates in the IRS data. The $200,000 and above level was used to estimate income for the top 5% of earners. The top two estimates were used for income estimates for the top 10%. Returns filed by race were estimated using population percentages from HC01. The income, credit and tax total by race were estimated based on the low and high numbers. This corrected the error of estimating total population and the top 10% and estimating income for bottom 90% (which had resulted in negative tax rates for Asians). Oops.
These rates were applied to IRS SOI data. Debt liability was calculated at 13.76 times tax liability for each racial/income grouping and the entire population. Federal Reserve SCF data were used to estimate the breakdown of debt ownership by percentile and race. 90th percentile debt estimates were distributed by racial estimates for FRS/Bank and other debt held by the public. Debt held by the government distributions existed include race for civil service membership, which was used to impute G Fund ownership and postal system retirement. Population based race distributions were used to estimate Social Security and Medicare asset distributions. Military retirement was entirely in the bottom 90% and had no racial breakdown.
Subtotals by economic class and race can be found in the accompanying tables.
The Brookings-Urban Tax Policy Center released its Feature on Racial Disparities and the Income Tax System January 30, 2020. These notes accompany our study on how taxes, debt liability and debt ownership are spread by race. Data sources are the Federal Reserve Consumer Finance Survey (2016), the 2017 tax distribution figures in the 2019 IRS SOI Data Book and the Census/BLS Household Current Population Survey Table HC01.
Racial groupings selected were Whites Only, Black AOIC (which may double count Latinos), Latinos of all races and Asian AOIC. No mix got close to the 125,000-household figure in HC-01, but the percentages do reflect the TPC graphic on Tax Burden. The first release of our table attempted to reconcile total income distribution, distribution among the top 10% and the bottom 90%, which were applied to the IRS Data. The numbers did not add up. Further analysis of the HC01 data was required.
HC01 data was weighted by income tax estimates. The mean value estimator for the bottom 90% ($145,000 and below) was 79% of the stated income brackets. Between $145,000 and $200,000, the mean estimator was 65%. These figures were based on the AGI estimates in the IRS data. The $200,000 and above level was used to estimate income for the top 5% of earners. The top two estimates were used for income estimates for the top 10%. Returns filed by race were estimated using population percentages from HC01. The income, credit and tax total by race were estimated based on the low and high numbers. This corrected the error of estimating total population and the top 10% and estimating income for bottom 90% (which had resulted in negative tax rates for Asians). Oops.
These rates were applied to IRS SOI data. Debt liability was calculated at 13.76 times tax liability for each racial/income grouping and the entire population. Federal Reserve SCF data were used to estimate the breakdown of debt ownership by percentile and race. 90th percentile debt estimates were distributed by racial estimates for FRS/Bank and other debt held by the public. Debt held by the government distributions existed include race for civil service membership, which was used to impute G Fund ownership and postal system retirement. Population based race distributions were used to estimate Social Security and Medicare asset distributions. Military retirement was entirely in the bottom 90% and had no racial breakdown.
Subtotals by economic class and race can be found in the accompanying tables.
posted by Michael Bindner at 9:20 PM
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