Prepared for the 16 th Annual RRC Conference August 7 2014 by Karen Smith and Eric Toder Urban Institute and Tax Policy Center 1 Motivation 2 Methods Urban Institutes DYNASIM Model ID: 545210
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How Progressive Are the Combined Net Benefits of Social Security and Tax Benefits for Retirement Saving?
Prepared for the 16th Annual RRC Conference, August 7, 2014byKaren Smith and Eric ToderUrban Institute and Tax Policy Center
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Motivation
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Methods
Urban Institute’s DYNASIM Modelhttp://www.urban.org/UploadedPDF/412512-Projection-Methods-Used-in-the-Dynamic-Simulation-of-Income-Model.pdf3Slide4
Point 1
4Estimated distributional effects of any specific spending program or tax subsidy depend on how it is financedSlide5
How are retirement saving incentives funded?
1) Tax rates 3.84 percent higher. 2) Tax rates 0.9 percentage points higher.3) Taxes for everyone 15 and over $200 higher.
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Point 2
OASDI is progressive6Slide7
Net OASDI benefits are positive and rising over time
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Net OASDI as a Share of Lifetime Earnings
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(1980-1989 cohorts)Slide9
Point 3
Tax incentives for retirement saving favor higher earners, but how much depends on how we assume they are financed 9Slide10
Increase in Net Retirement Income as a Share of Lifetime Earnings
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Point 4
Two programs together are progressive11Slide12
Combined Net Benefits as Share of Net Lifetime Earnings
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Extensions
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