Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70620
Authors: 
Armour, Brian S.
Pitts, M. Melinda
Year of Publication: 
2006
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2006-12
Abstract: 
While the health risks associated with smoking are well known, the impact on income distributions is not. This paper extends the literature by examining the distributional effects of a behavioral choice, in this case smoking, on net marginal Social Security tax rates (NMSSTR). The results show that smokers, as a result of shorter life expectancies, incur a higher NMSSTR than nonsmokers. In addition, as low-earnings workers have a higher smoking prevalence than high-earnings workers, smoking works to widen the income distribution. This higher tax rate could have implications for both labor supply behavior and Social Security system funding.
Subjects: 
smoking
Social Security
health
taxes
widows
low earnings
JEL: 
H55
I1
Document Type: 
Working Paper

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