Income and timeliness SILC workshop 2018 - Warsaw

Identify bottlenecks Late availability of registers (mainly tax-data) Mostly only one person could work at SILC at anytime Manual time consuming tasks (Enter questionnaires, ISCO-coding etc.) Unneccesary complexity in programmes Lack of structure and naming standards Other statistics and tasks had higher priority than SILC data processing

Question: How do recent cuts in benefits affect inequality and poverty? Answer: Excellent question! Come back in 12 months and we’ll let you know

The Danish tax system Taxation at the source Taxes are collected from wages and transfers directly from the employer or the benefactor based on pre-tax assessment Wages, transfers and preliminary taxes paid are reported directly to the tax authorities as they are paid via the E-income system Other types of Income are included in the final tax assessment

Two possible sources The preliminary income register Income statistics based upon the E-income register Covers only wages, transfers and preliminary taxes Is published at N+5 Use for SILC would require imputation and asking questions on Self employment income and capital income. The final income register Based on the final tax assessment Covers all (reported) income types Publication moved from N+12 to N+9

Preliminary incomes coverage - 2014 Coverage in per cent 98,6 % 1,1 % 98,0 % 80,8 %

The missing components of ”other income” - Potential data sources at N+4. Non taxable transfers Timely available in public registers. In some cases we might need earlier data deliveries Income from self employment Imputation based on income from previous years, current wage levels and market developments Property income Imputation based on income from previous years, the wealth register, interest rates and stock market data Imputed rent Housing evaluation register from prior year and the population register

Two possible sources The preliminary income register Income statistics based upon the E-income register Covers only wages, transfers and preliminary taxes Is published at N+5 Use for SILC would require imputation and asking questions on Self employment income and capital income. The final income register Based on the final tax assessment Covers all (reported) income types Publication moved from N+12 to N+9

Quality vs. Timeliness trade-off The final tax assessment can be revised for up to 5 years following the end of the year. What is the best time for extraction data? Tax statement revision frequency Time of data extraction? Time Quality of data

When are tax statements approved? When did the population liable for taxation have their tax statement approved (2015 November extract)?

Note that… An approved tax statement may be revised at a later point if new information arises. A not approved tax statement is rarely empty. It’s in most cases partially filled.

Accumulated share of completed tax statements by year (Nov. extracts).

Aprooved tax statements may be revised

August 2017 extract so far looks slightly better than August 2016 extract

Effect on self-employed income by data extraction time, 2015.

Effect on post-tax income

Effect on Equi. Disposable income by percentile, 2015 Gini August-extract: 28,825 Gini november-extract 28,786

Data checks and need for revisions?

Policy of revisions So far there are no plans to revise August data with the November extract The differences between the august and November is monitored, if they become larger the policy on revisions may be revised. Disposable income (2016) # with Income ≠ 0 avg. DKK Sum i DKK mio. August 4.688.535 224.079 1.050.602 September 4.688.808 223.874 1.049.702 November 4.689.233 223.892 1.049.881 Afvigelse i forhold til november, pct. -0,01 0,08 0,07 -0,02 0,00

Standard data checks Level and growth rates of various income types are checked during data processing and upon loading incomes into statbank. They are checked while keeping in mind the state of the economy and possible political changes

Check for outliers (1) Calculates standard deviations for 20 different types of income (excluding zero-incomes). Measure distance from mean in terms of standard errors at level of individuals Measure individuals effect on average income in municipality and countrywide The largest outliers are listed

Check for outliers (2) Outlier programmed in SAS Output: Personal ID, code for tax liability, code for approvement of tax statement, amount, Standard deviations from mean, stars(1-5), effect on averages, municipality Focus on non-approved tax statements Suspicious outliers are checked against income in former years and wealth data No outliers removed in 2017, but could have prevented a mistake in 2016 had it been ready - does it have any value?

Timeliness improvement Timeliness 2015 N+05 Preliminary incomes published (E-income no imputations) N+12 Final incomes + inequality published N+18 Cross-sectional SILC delivered Timeliness 2017 N+09 Final Incomes published N+11 Inequality published N+11 Cross-sectional SILC delivered