Implications of Proposed Tax Increases for Retirement Savings
4 Pages Posted: 9 Jan 2010 Last revised: 24 Jan 2010
Date Written: November 4, 2009
This analysis examines the implications of proposed payroll tax hikes, income tax increases, and a health care financing surtax for workers' retirement preparation. The retirement savings model is a rational forward-looking framework that aims to maintain a roughly constant standard of living before and after retirement. The results show that tax increases depress retirement savings, and may make it harder for retirement plans to pass non-discrimination tests.
Keywords: tax, retirement savings, replacement rate, living standard
JEL Classification: H24, E21
Suggested Citation: Suggested Citation