A.1.2. Bureau of Economic Analysis and State Personal Income

Unlike the IRS’s Statistics of Income, the BEA’s State Personal Income data are not displayed by income classes. The State Personal Income from the BEA are used instead when it comes to comparing the income level of the top decile to the average income. The BEA introduces some differences between the national aggregate and the state estimate of personal income:

‘The main differences between the national income and product accounts (NIPAs) estimates of personal income and the State estimates of personal income stem from the treatment of the income of U.S. residents who are working abroad and the treatment of the income of foreign residents who are working in the United States. The national total of the State estimates of personal income consists of only the income earned by persons who live within the United States, including foreign residents working in the United States. The measure of personal income in the NIPAs is broader.’

From 1929 to 2003, the national and state personal income data come from the Bureau of Economic Analysis. For data prior to 1929, Piketty and Saez ⁴³ completed the personal income series by linking it to the 1913-1929 personal income series published by Kuznets (1941, 1945). The authors made downward adjustments over the time series so that the total personal income does not exceed the total tax return gross income. The contrary would “seem implausible: This would imply that non-filers have higher average incomes than filers.”

I used Piketty and Saez’s national series from 1913 to 1928 to estimate their state equivalent, with the income share of each state in the national income between 1913 and 1928 supposed to be proportional to the same state income share for year 1929. In other words, the state personal income estimates keep the same proportion of the national aggregate ⁴⁴ from 1913 to 1928 as the state shares of personal income represent in U.S. total income for 1929.