CBO Presents Initial Estimates of Taxpayers by Race and Ethnicity

Posted by
Rebecca Heller
Shannon Mok
James Pearce
May 29, 2024

The Congressional Budget Office responds to questions from the Congress to provide additional information about federal policies, and many Members have asked the agency to provide information about how the effects of policies differ by race and ethnicity. CBO has been increasing its capacity to analyze how budgetary and economic conditions or developments affect demographic groups differently.

Policymakers are interested in whether there are differential outcomes from the tax system by race and ethnicity, but there are challenges in obtaining the data for such analyses because tax data do not contain information about race and ethnicity. CBO currently supplements tax return data with survey data by statistically matching records on the basis of income and a limited set of demographic characteristics that appear in both data sources. Through a collaboration with the Census Bureau, CBO has made progress in evaluating how the distribution of income by race and ethnicity using that method compares with the estimated distribution using information from survey respondents directly linked to their tax return data. CBO presented the initial results at the American Economic Association (AEA) Annual Meeting in January, 2024. The work was also published in AEA Papers and Proceedings in May 2024.

The work to evaluate if the statistically matched data could be used for analyzing information reported on tax returns by additional demographic characteristics, such as race and ethnicity, is ongoing. CBO plans additional work to compare the distribution of income on a household level and to identify areas in which estimates using its statistically matched data differ from those using the linked data.

Rebecca Heller, Shannon Mok, and James Pearce are analysts at CBO.