Quote:
Originally Posted by ncole1
When the working class is unable to make ends meet, inevitably they will simply not pay all their bills. In effect this becomes a "back door" wealth redistribution mechanism (from creditors to debtors) that fills the gap when the other mechanisms are not sufficient. Is there a way to estimate how much wealth is redistributed per year by this mechanism?
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I like how you use "estimate" because that's pretty much what you'd have to do. There's no way to collect that data directly, but it can be collected indirectly through myriad sources.
Once source of indirect data would be bankruptcy filings. You can look at Chapter 7 and Chapter 13, and then Chapter 12 (exclusive for family farms and fisheries). Westlaw, Lexis-Nexis, Hogan, Choicepoint and others collect that data, but you'd need to be a subscriber to access it.
Collections and defaulted accounts on Experian, Equifax and TransUnion would be another source, but you'd have to be a Tier IV or Tier V subscriber to access it.
The IRS used to publish statistical data on W-2s, W-4s and 1099s. I don't know if they still do, but for older reports you'd be looking for 1099-Cs, and maybe the last 10 years or so 1099-MISC. The 1099-MISC is imputed income. If you default on your credit card and the balance is $30,000 at some point in the process you'll receive a 1099-MISC in the amount of $30,000 and you'll have to declare that as income and pay taxes on it to the IRS and State and local income taxes if you're subject to those as well. If your student loan is forgiven you'll get a 1099-MISC on the principal and have to pay taxes on that. A lot of other debts like auto repossessions, revolving credit accounts and the like are reported on 1099-MISC.
IRS tax data from the quarterly statistical publications would be another. For individual tax returns, you'd be looking at mostly private landlords, meaning sole proprietorships, partnerships and limited liability companies, and also Subchapter S-Corps that wrote off defaulted rent payments.
The IRS also publishes statistical data from corporate tax returns. It's been years since I've looked at one, but they do/did include data from all the schedules and you'd be looking at the loss schedules.
In the past, I have seen reports published by different organizations on statistical bankruptcy data. These were organized by circuit, and then total number of filings and amount discharged, and then by chapter and amount discharged. If you could find one of those, that would probably give you a ball-park estimate, but note that not everyone files bankruptcy.
Since you know the number of households in the US, if you knew the number of bankruptcies discharged, you'd know the percentage of households that file bankruptcies and then extrapolate from there.
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