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• Edward Whitehouse

Most countries give income-tax concessions to older people relative to people of working age. Some treat pension income more favourably than earnings, and most do not levy social security contributions on older people. These policies mean that the direct tax burden of older people is lower than that carried by people of working age. At an income equivalent to economy-wide average earnings, for example, the average tax burden (in the nine countries studied) is ten percentage points lower for pensioners than it is for workers. Therefore differences in taxes between pensioners and workers are an important way in which governments support people during their retirement. This is measured by the effect on net replacement rates: the value of pension benefits for a full-career worker relative to earnings when in work. On average, one fifth of the net replacement rate for a worker on average earnings is due to tax differentials rather than the pension system.

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La plupart des pays font des concessions d’impôt sur le revenu pour les personnes âgées par rapport aux personnes en activité. Certains pays sont plus favorables aux revenus des pensions de retraite qu’aux gains d’activité. La plupart ne prélèvent pas de contributions de sécurité sociale aux personnes âgées. Ces politiques signifient que le poids de l’impôt direct sur les personnes âgées est plus bas que celui porté par les actifs. A échelle de l’économie d’un pays, et pour un revenu équivalent aux gains d’activité moyens par exemple, le poids moyen de l’imposition (pour les neuf pays étudiés) est de 10% de moins pour les retraités par rapport aux actifs. Ainsi les différences d’imposition entres retraités et actifs sont révélatrices du soutien important des gouvernements aux personnes retraitées. Ceci est mesuré par les effets sur les taux de substitution nets : la valeur des revenus de pension pour un actif ayant cotisé toute sa carrière par rapport à ses revenus d’activité. En ...

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Paper provided by OECD Directorate for Employment, Labour and Social Affairs in its series OECD Social Employment and Migration Working Papers with number 8.

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Date of creation: 06 Jun 2003
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Handle: RePEc:oec:elsaab:8-en

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Find related papers by JEL classification:
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
J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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1. Verbist G, 2005. "Replacement Incomes and Taxes: A distributional analysis for the EU-15 countries," EUROMOD Working Papers em2/05, EUROMOD at the Institute for Social and Economic Research. [Downloadable!]
2. Mantovani D & Papadopoulos F & Sutherland H & Tsakloglou P, 2005. "Pension Incomes in the European Union: Policy Reform Strategies in Comparative Perspective," EUROMOD Working Papers em5/05, EUROMOD at the Institute for Social and Economic Research. [Downloadable!]
   Other versions:
   • Daniela Mantovani & Fotis Papadopoulos & Holly Sutherland & Panos Tsakloglou, 2005. "Pension Incomes in the European Union: Policy Reform Strategies in Comparative Perspective," IZA Discussion Papers 1537, Institute for the Study of Labor (IZA). [Downloadable!]

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