Earlier this week, Charles Hugh Smith suggested that the federal government abandon its use of survey-based employment data and instead simply use IRS data on incomes and tax filings to estimate trends in employment and income.
As Smith notes, the IRS data gives us a good idea of how many people are earning income. The fact that reporting income to the IRS is mandatory suggests it may be more reliable than the telephone survey data used for the Household Survey of employment.
Indeed, looking through this data, we can easily see how many filers reported income.1 (“Filers” can include joint filings from married couples.) Because the US forces even non-US residents to pay on income, not all filers are US residents. Nevertheless, the vast majority of filers are residents, and this gives us an idea of how many Americans have jobs and how many are paid wages and salaries. Other income is included as well, such as dividends, capital gains, and all those other sources of income you’re supposed to report on your returns. The data includes more than just taxable income. We can use it to attempt to recreate a measure of total income overall.
This post was published at Ludwig von Mises Institute on 09/16/2016.