Research Report Wealth, Realized Income, and the Measure of Well-Being
C. Eugene Steuerle
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Realized income is a widely accepted measure of well-being. This paper examines the relationship between realized income and wealth and economic income, using a national sample of income tax returns matched with estate tax returns to compare the realized property income of individuals with the with the associated amount of wealth that generates that income. The study demonstrates that with respect to those who hold a significant amount of wealth, realized income is an extremely poor measure of well-being. This leads to inequity in tax and welfare programs. Finally, this study illustrates the usefulness of estate-income collation in studying wealth-income relationships.
Research Areas Economic mobility and inequality Wealth and financial well-being Taxes and budgets
Tags Asset and debts Individual taxes Income and wealth distribution Financial stability
Policy Centers Urban-Brookings Tax Policy Center