High income distribution from the IRS

Three more figures to confirm that income inequality has not been changing since 1996.  Following our previous post we have calculated population density functions, PDF, for the years between 1996 and 2009.  Figure 1 depicts the overall PDF, i.e. portions of the overall income vs. portions of population with given incomes. Figures 2 and 3 illustrate the high income range and the Pareto distribution.  

In Figure 2, all years except 2000, 2001, and 2002 show almost identical distributions. The years 2000, 2001, and 2002 show larger discrepancy contradicting the other years. The reason of the divergence is not clear. When these abnormal years are excluded together with the highest income bin between $5,000,000 and $10,000,000, where measurements might be biased, one obtains an ideal power law distribution.  Between $5,000,000 and $10,000,000, the measurements show a significant fall relative to the power law line what implies a smaller number of people with very high incomes.

Figure 1. Population density functions (normalized to the total number of tax payers) for the period between 1996 and 2009.

Figure 2. High income distribution of the PDFs in Figure 1.   Upper panel: all years except 2000, 2001, and 2002 – distributions are almost identical. Lower panel: the years 2000, 2001, and 2002 show larger discrepancy contradicting the other years.

Figure 3.  High income distribution of the PDFs in Figure 1.