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Understanding Business Dynamics: An Integrated Data System for America’s Future
among statistical agencies for the purpose of reconciling the business lists and for the design of special surveys. This expansion ofdata sharing can be accomplished by: (1) Congress acting to reviseInternal Revenue Code Section 6103(j) to extend authorized accessof IRS tax information to BEA and BLS; (2) the Treasury Department initiating an update of the IRS regulations, which clarify thepurpose and detail specific items that can be shared with authorized agencies; or (3) a combination of both actions.
The goal of the agencies charged with creating and maintaining the source lists should always be to include accurate data on all business units, large and small, new and old. There are, according to the Census Bureau, roughly 18 million nonemployer firms—individual proprietorships, partnerships, or corporations with no paid employees—that account for about three quarters of all firms and a reasonably large fraction (12 percent in 2000) of aggregate U.S. business revenues. Thus, sharing of business data would be quite limited if it did not permit an integration of data on the full range of businesses operating in the economy.
In order to create a comprehensive business list and to generatedata that would be useful for studying the dynamics of small andyoung firms, interagency sharing agreements should extend to dataon nonemployers. Data on all sole proprietors and partnershipsmust also be included, whether they have employees or not.
We believe that a compelling data-driven case has been made, in this report and elsewhere, that reconciliation of the business lists would better serve downstream users—such as BEA in the production of national accounts, the Federal Reserve in carrying out research to inform monetary policy, and the Congressional Budget Office in projecting real gross domestic product growth—to an extent that more than warrants the actions recommended here. The political and legal feasibility of expanding data sharing among the statistical agencies has been enhanced by CIPSEA; indeed, given the uniform set of requirements enacted through CIPSEA, the agencies are now in a better position than ever before to protect data collected for statistical purposes under a pledge of confidentiality.
Increasing the Value of Data Collection by Expanding Use
The statistical agencies rightly view themselves primarily as data producers, and their mission is to do so, maximizing quality subject to budget constraints. While the agencies do maintain skilled in-house staffs, the vast share of research expertise resides elsewhere, at universities or other nongovernmental institutions. It is the intensive use of statistical agency prod-