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Unemployment Insurance Tax Burdens and Benefits: Funding Family Leave and Reforming the Payroll Tax

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  • Anderson, Patricia M.
  • Meyer, Bruce D.

Abstract

We examine the distributional consequences of the Unemployment Insurance (UI) payroll tax. Applying the ability–to–pay principle of equity, the UI payroll tax is quite regressive, while applying the benefits principle makes the UI program look quite good. We then simulate a revenue–neutral increase of the UI tax base to the OASDI tax base level, which appears equity–enhancing under the ability–to–pay principle, but has mixed effects under the benefits principle. Finally, providing family leave within the UI system would maintain the regressivity that violates the ability–to–pay principle of equity, but would agree much better with the benefits principle.

Suggested Citation

  • Anderson, Patricia M. & Meyer, Bruce D., 2006. "Unemployment Insurance Tax Burdens and Benefits: Funding Family Leave and Reforming the Payroll Tax," National Tax Journal, National Tax Association;National Tax Journal, vol. 59(1), pages 77-95, March.
    • Handle: RePEc:ntj:journl:v:59:y:2006:i:1:p:77-95
    DOI: 10.17310/ntj.2006.1.04
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    Cited by:

    1. Audrey Guo & Andrew C. Johnston, 2021. "The Finance of Unemployment Compensation and Its Consequences," Public Finance Review, , vol. 49(3), pages 392-434, May.
    2. Catalina Amuedo‐Dorantes & Jean Kimmel, 2009. "Moonlighting Over The Business Cycle," Economic Inquiry, Western Economic Association International, vol. 47(4), pages 754-765, October.
    3. Guo, Audrey & Johnston, Andrew C., 2020. "The Finance of Unemployment Compensation and its Consequence for the Labor Market," IZA Discussion Papers 13330, IZA Network @ LISER.
    4. Amuedo-Dorantes, Catalina & Kimmel, Jean, 2005. "Moonlighting Behavior over the Business Cycle," IZA Discussion Papers 1671, IZA Network @ LISER.
    5. Bruce D. Meyer & Wallace K. C. Mok & James X. Sullivan, 2009. "The Under-Reporting of Transfers in Household Surveys: Its Nature and Consequences," Working Papers 0903, Harris School of Public Policy Studies, University of Chicago.
    6. Christopher J. O’Leary & Burt S. Barnow & Karolien Lenaerts, 2020. "Lessons from the American federal‐state unemployment insurance system for a European unemployment benefits system," International Social Security Review, John Wiley & Sons, vol. 73(1), pages 3-34, January.

    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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