Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94886
Authors: 
Fölster, Stefan
Year of Publication: 
1996
Series/Report no.: 
IUI Working Paper 454
Abstract: 
In spite of some cutbacks in entitlements, many welfare states' spending has continuously increased over the past decades, leading to larger tax burdens and often higher marginal tax rates. Proposals for reform often focus on reduced social insurance benefits and more actuarial insurance premia. In this paper it is shown that such reforms may have a smaller potential for reducing the marginal tax rate than commonly assumed, unless they are combined with mandatory personal savings accounts. Social insurance based on personal savings account is compared to other systems in a simple theoretical model and in a simulation within the context of Swedish social insurance. The simulation indicates that marginal tax effects can be reduced significantly by social insurance based on savings accounts without affecting life-tim income distribution much.
Subjects: 
WELFARE STATE
SOCIAL INSURANCE
JEL: 
D60
D63
D69
Document Type: 
Working Paper

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