The Tax Benefit of Income Smoothing

11 Pages Posted: 10 May 2011 Last revised: 30 Oct 2013

See all articles by Kristian Rydqvist

Kristian Rydqvist

State University of New York at Binghamton - School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Steven T. Schwartz

SUNY at Binghamton - School of Management

Joshua D. Spizman

Loyola Marymount University - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: June 1, 2013

Abstract

A worker can contribute pre-tax dollars to a private pension plan. Under a progressive tax, this feature reduces income taxes. Ippolito (1986) argues that an individual in 1979 can reduce lifetime taxes by 20%. We re-examine his analysis using the complete time-series of US income tax history and find that the tax benefit of income smoothing is much smaller.

Keywords: private pensions, tax progressivity, income tax history

JEL Classification: G11, G18, G23, H24, D91

Suggested Citation

Rydqvist, Kristian and Schwartz, Steven T. and Spizman, Joshua D., The Tax Benefit of Income Smoothing (June 1, 2013). Journal of Banking & Finance 38 (2014) 78–88, Available at SSRN: https://ssrn.com/abstract=1836577 or http://dx.doi.org/10.2139/ssrn.1836577

Kristian Rydqvist (Contact Author)

State University of New York at Binghamton - School of Management ( email )

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Steven T. Schwartz

SUNY at Binghamton - School of Management ( email )

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United States
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Joshua D. Spizman

Loyola Marymount University - Department of Finance ( email )

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United States
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HOME PAGE: http://www.joshuaspizman.com

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