Capitalizing Data: Case Studies of Tax Forms and Individual Credit Reports

Early papers on capitalizing data focused on complex digital data that are stored on supercomputers and managed by highly skilled computer scientists (Statistics Canada 2019) (Eurostat 2020) (Coyle 2022) (Calderon and Rassier 2022) (Mitchell et al. 2022). This paper studies two very different types of data: tax forms and individual credit reports. Both types of data are simple text records that can be stored on any computer or even on paper (Brenton 1964) and managed by workers with only a high school degree (Bureau of Labor Statistics 2022a) (Weedmark 2021). Despite their simplicity, these two data types are expensive to create. This paper estimates that tax forms had a creation cost of $0.4 trillion in 2017 and individual credit reports had a creation cost of $0.6 trillion in 2017.

Historical growth changes noticeably when tax forms and individual credit reports are tracked as long-lived intangible assets. Tax form creation rose rapidly between 1929 and 1950 due to the introduction of Social Security and widespread federal income taxes. As a result, including tax forms increases real gross domestic product (GDP) growth between 1929 and 1950 by 0.12 percentage point per year. In contrast, real credit report creation plummeted in 1970 due to the passage of the Fair Credit Reporting Act (FCRA). As a result, including individual credit reports decreases real GDP growth in 1970 by 1.6 percentage point. However, neither tax forms nor individual credit reports have much impact on recent GDP growth.