Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/266490 
Year of Publication: 
2022
Series/Report no.: 
arqus Discussion Paper No. 272
Publisher: 
Arbeitskreis Quantitative Steuerlehre (arqus), Berlin
Abstract: 
Using a series of experiments, we examine whether the additional opportunity to save retroactively for retirement at the time of tax filing increases overall retirement savings. Our findings show that introducing the additional savings opportunity at tax time increases the total savings rate by almost 5 percentage points. This positive effect holds regardless of whether retirement savings are taxed immediately (back-loaded pension plans) or deferred (front-loaded pension plans) or whether subjects expect back taxes or a tax refund. We show that the effect is not due to higher tax salience at tax time but that the additional offer to save nudges impulsive savings behavior. Policymakers may thus consider the introduction of an additional savings opportunity at tax time as a policy tool to encourage retirement savings. In addition, policymakers should consider the advantage of immediate over deferred taxation in increasing retirement savings. We show that the savings gap between immediate and deferred taxation found in previous studies can expand further if savings are additionally allowed at tax filing.
Subjects: 
Retirement savings
tax incentives
impulsive savings
tax salience
nudging
deferred taxa-tion
JEL: 
D9
D14
D15
G51
H31
Document Type: 
Working Paper

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