Simulating Income Tax Liabilities in the Survey of Consumer Finances

This policy brief summarizes a new paper (Gale et al. 2022a) in which we develop and refine methods for estimating income tax liabilities in public-use Survey of Consumer Finances (SCF) micro data files. Most recently conducted in 2019, the SCF is a triennial household survey with extensive demographic, income, and balance sheet information, for the designated survey respondent, and if present, the respondent’s spouse/partner. The survey also collects basic demographic information, financial dependency indicators, and summary income measures for up to ten additional household members. The SCF is unique among public-use household surveys because it oversamples wealthy households and is thus suitable for studying trends in top wealth and income shares (Bhutta et al. 2020; Bricker et al. 2016). Like most household surveys, however, the SCF does not ask detailed questions about household tax filing or tax liabilities.