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How does population ageing impact on personal income taxes and social security contributions?

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  • Prammer, Doris

Abstract

This paper analyses the impact of population ageing on income tax revenues and social security contributions for Austria. A static analysis focusing only on ageing - based on three population scenarios from the literature – leads to declining per capita income tax revenues and social security contributions of up to ten percent. However, a dynamic analysis combining the population scenarios with long run scenarios, that assume growing real wages and pension benefits, leads to increasing per capita income tax revenues and social security contributions. The findings of the dynamic analysis are driven by three factors: First and most importantly, by increasing wage and pension benefits. Second, by population growth that counteracts negative per capita effects of ageing on overall revenues. Third, new status-specific estimates of tax elasticities utilizing micro-data and quantile regression also explain 1/6 th of the observed increase.

Suggested Citation

  • Prammer, Doris, 2019. "How does population ageing impact on personal income taxes and social security contributions?," The Journal of the Economics of Ageing, Elsevier, vol. 14(C).
    • Handle: RePEc:eee:joecag:v:14:y:2019:i:c:s2212828x18300586
    DOI: 10.1016/j.jeoa.2018.12.005
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    Cited by:

    1. Amalia Cristescu, 2019. "The Impact Of The Aging Population On The Sustainability Of Public Finances," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 13(2), pages 52-67, DECEMBER.
    2. Cylus, Jonathan & Williams, Gemma & Carrino, Ludovico & Roubal, Tomas & Barber, Sarah, 2022. "Population ageing and health financing: A method for forecasting two sides of the same coin," Health Policy, Elsevier, vol. 126(12), pages 1226-1232.

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    More about this item

    Keywords

    Taxation; Population ageing; Pension expenditure projection; Revenue to base elasticity;
    All these keywords.

    JEL classification:

    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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