Changes in the Distribution of Higher Incomes

Abstract

Some information on the distribution of personal income, by raniges of total income before anid after tax, is given annually in the Blue Books on National Income and Expenditure. Such data have been analysed by Professor Paishl and others and I do not intend to pursue the matter here. My purpose is to go into more detail, by type of income as far as the data provided by Inland Revenue permit. Inland Revenue is undertaking a series of enquiries, at five-yearly intervals, into the distribution of personal income assessed for income tax. These are on a sample basis and the results of the first two enquiries are now available.2 The first relates to income assessed in 1949-50 (10 per cent. sample of returns) and the second to assessments in 1954-55 (5 per cenit. sample of returns). According to the description given of the second enquiry, the sample comprised approximately one million individuals (or married couples) whose total income from all sources was obtained by reference to their returns and other income tax documents (Cmnd. 54, p. 66). The income derived from wages, salaries, etc., and also from investments, generally relates to the year of assessment ; but profits and professional earnings are those arising in earlier periods, usually the trader's accounting year which ends in the preceding year to that of the assessment. In the following analysis, the data are described as income for 1949-50 and for 1954-55 respectively. Some labels must be attached ; they must be interpreted rather broadly. There is also an enquiry, made by Inland Revenue before the last war, which can be used for some comparisons.3 It was made on assessments in 1937-38 and generally relates to income arising in 1936-37. The label attached in this case, i.e. 1936-37, is a fairly close description of the data. The information given as a result of these enquiries is circumscribed by Inland Revenue practice and by the classifications adopted. The main data are detailed analyses, in successive bainds of total net income before tax, of the composition of aggregate incomes according to type of income. For each income type the number of cases (individuals