The Tax Benefit of Income Smoothing

35 Pages Posted: 16 Jun 2011

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 2011

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: income tax history, private pensions, tax progressivity

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

Suggested Citation

Rydqvist, Kristian and Schwartz, Steven T. and Spizman, Joshua D., The Tax Benefit of Income Smoothing (June 2011). CEPR Discussion Paper No. DP8425, Available at SSRN: https://ssrn.com/abstract=1865575

Kristian Rydqvist (Contact Author)

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

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Binghamton, NY 13902-6015
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Centre for Economic Policy Research (CEPR)

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European Corporate Governance Institute (ECGI) ( email )

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Steven T. Schwartz

SUNY at Binghamton - School of Management ( email )

Binghamton, NY 13902-6015
United States
607-777-2102 (Phone)

Joshua D. Spizman

Loyola Marymount University - Department of Finance ( email )

Los Angeles, CA 90045
United States
(310) 338-2902 (Phone)

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

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