Does it pay to work? This is a tough question because of the complexity of the tax code and the plethora of dynamic linkages involved: 1) Earning more today typically alters current saving and, therefore, future capital income taxes. 2) Earning more today generally alters future consumption and, therefore, future consumption taxes. 3) Changing future levels of income and assets changes the eligibility for and levels received of income- and asset-tested transfer benefits. 4) The most important transfer program, Social Security, explicitly links future transfer payments to current earnings. 5) Income taxes in retirement depend on past earnings because Social Security benefits, which are subject to federal income taxation, depend on past earnings. This paper attempts to capture the net effective tax on work by using an intertemporal model capable of carefully determining tax and transfer payments at each stage of the life cycle.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Federal Reserve Bank of Cleveland in its series Working Paper with number
0206.
Jagadeesh Gokhale & Laurence J. Kotlikoff & Alexi Sluchynsky, 2002.
"Does It Pay to Work?,"
NBER Working Papers
9096, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Michael D. Hurd & John B. Shoven, 1985.
"The Distributional Impact of Social Security,"
NBER Chapters,
in: Pensions, Labor, and Individual Choice, pages 193-222
National Bureau of Economic Research, Inc.
[Downloadable!]
Other versions:
Steven Caldwell & Melissa Favreault & Alla Gantman & Jagadeesh Gokhale & Thomas Johnson & Laurence J. Kotlikoff, 1999.
"Social Security's Treatment of Postwar Americans,"
NBER Chapters,
in: Tax Policy and the Economy, volume 13, pages 109-148
National Bureau of Economic Research, Inc.
[Downloadable!]
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)