Big Data for Tax Preparation Firms I
Data Covers Entire Industry Rather Than Individual Companies
If there is a trend that has marked this decade, it is the use of “big data” to discern trends that will help define what the market is doing today – and what it is likely to do in the future. This “big data” is aggregate information, covering the entire industry rather than individual companies.
For data on individuals filing a 1040 return, the Internal Revenue Service provides this data in two forms -- The Individual Income Tax Rates and Tax Shares bulletin article and associated statistical tables that describe the income and tax distribution, both in terms of percentiles and marginal tax rates, of all tax returns for the years 1986 through 2011 at http://www.irs.gov/uac/SOI-Tax-Stats-Individual-Income-Tax-Rates-and-Tax-Shares. A separate file was released to cover 2012 at Statistics of Income—2012, Individual Income Tax Returns Complete Report (Publication 1304).
In coming weeks, Taxing Subjects will cover select information from these data sources, including that:
- The top 5/100ths of one percent of taxpayers paid 10% of all taxes
- The top 10% of all taxpayers paid 60% of all taxes
- The top 50% of all taxpayers paid 95+% of all taxes
Our analysis will primarily cover the two most recent years, though tax preparers may wish to pursue data for previous years as well.