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The Effect Of Recent Tax Changes On Tax-Preferred Saving Behavior

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

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.

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Article provided by National Tax Association in its journal National Tax Journal.

Volume (Year): 65 (2012)
Issue (Month): 2 (June)
Pages: 283-311

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Handle: RePEc:ntj:journl:v:65:y:2012:i:2:p:283-311
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  1. Summers, Lawrence H, 1981. "Capital Taxation and Accumulation in a Life Cycle Growth Model," American Economic Review, American Economic Association, vol. 71(4), pages 533-44, September.
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  7. Bakija, Jon & Heim, Bradley T., 2011. "How Does Charitable Giving Respond To Incentives And Income? New Estimates From Panel Data," National Tax Journal, National Tax Association, vol. 64(2), pages 615-50, June.
  8. Eric M. Engen & William G. Gale, 2000. "The Effects of 401(k) Plans on Household Wealth: Differences Across Earnings Groups," NBER Working Papers 8032, National Bureau of Economic Research, Inc.
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  11. James M. Poterba & Steven F. Venti & David A. Wise, 1996. "How Retirement Saving Programs Increase Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 91-112, Fall.
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  14. Gruber, Jon & Saez, Emmanuel, 2002. "The elasticity of taxable income: evidence and implications," Journal of Public Economics, Elsevier, vol. 84(1), pages 1-32, April.
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