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The Effect of Recent Tax Changes on Tax-Preferred Saving Behavior

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  • Heim, Bradley T.
  • Lurie, Ithai Z.

Abstract

This paper estimates the extent to which changes in tax policy induce changes in contributions to tax-preferred savings accounts using a panel of tax returns from 1999–2005 that spans the tax changes enacted in the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003. The results suggest a statistically significant, though small, response of taxpayers to changes in the after-tax price of contributing on the extensive margin, but not on the intensive margin. There is also some suggestive evidence that increases in after-tax incomes may have increased the probability of contributing to tax-preferred savings accounts and the amount contributed, though these results are not robust to alternative specifications.

Suggested Citation

  • Heim, Bradley T. & Lurie, Ithai Z., 2012. "The Effect of Recent Tax Changes on Tax-Preferred Saving Behavior," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(2), pages 283-311, June.
    • Handle: RePEc:ntj:journl:v:65:y:2012:i:2:p:283-311
    DOI: 10.17310/ntj.2012.2.02
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    Cited by:

    1. Bradley T. Heim & Ithai Z. Lurie, 2014. "Taxes, Income, And Retirement Savings: Differences By Permanent And Transitory Income," Contemporary Economic Policy, Western Economic Association International, vol. 32(3), pages 592-617, July.
    2. Emily Y. Lin & Patricia K. Tong, 2017. "Married couple work participation and earnings elasticities: evidence from tax data," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(6), pages 997-1025, December.

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