Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/270570 
Year of Publication: 
2017
Series/Report no.: 
CINCH Series No. 2017/06
Publisher: 
University of Duisburg-Essen, CINCH - Health Economics Research Center, Essen
Abstract: 
Since 1983, Social Security benefits have been subject to income taxation, a provision that can significantly increase the marginal income tax rate for older individuals. To assess the impact of this tax, we construct and calibrate a detailed life-cycle model of labor supply, saving, and Social Security claiming. We find that in a long-run stationary environment, replacing the taxation of Social Security benefits with a revenue-equivalent change in the payroll tax would increase labor supply, consumption, and welfare. From an ex-ante perspective an equally desirable reform would be to make the portion of benefits subject to income taxes completely independent of other income.
Subjects: 
Social Security
Labor Supply
Taxation
JEL: 
E21
H24
H55
I38
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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