Implications of Proposed Tax Increases for Retirement Savings

4 Pages Posted: 9 Jan 2010 Last revised: 24 Jan 2010

See all articles by Gaobo Pang

Gaobo Pang

Mark J. Warshawsky

Towers Watson; Mercatus Center at George Mason University

Date Written: November 4, 2009

Abstract

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

Pang, Gaobo and Warshawsky, Mark J., Implications of Proposed Tax Increases for Retirement Savings (November 4, 2009). Tax Notes, Vol. 125, No. 12, pp. 1349-1352, December 2009, Available at SSRN: https://ssrn.com/abstract=1532924

Mark J. Warshawsky

Towers Watson ( email )

Arlington, VA
United States

Mercatus Center at George Mason University

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

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