Progressive Tax Changes to Private Pensions in a Life-Cycle Framework
Tax concessions are a common feature of private pension pillars around the world. Most countries exempt pension fund earnings from any taxation but tax either benefits (EET regime) or contributions (TEE regime) progressively as regular private income. By contrast, Australia's superannuation taxation features concessional flat tax rates on contributions and fund earnings, with benefits being generally tax free. Concerned with the vertical equity of the current superannuation tax concessions, this paper provides a quantitative analysis of hypothetical replacements of the existing superannuation tax treatment with the EET and TEE regimes commonly found in other countries. Using a general equilibrium OLG model calibrated for Australia, we find that these hypothetical tax reforms to superannuation improve the vertical equity in the short, medium and long run, as indicated by larger relative welfare gains and income improvements experienced by lower income households.
|Date of creation:||Jan 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Ground Floor, East Wing, UNSW Kensington Campus, Sydney NSW 2052|
Phone: (+61)-2-9931 9202
Fax: (+61)-2 9385 6956
Web page: http://www.cepar.edu.au
More information through EDIRC
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.:
- Hans Fehr & Christian Habermann & Fabian Kindermann, 2006.
"Tax-Favored Retirement Accounts: Are they Efficient in Increasing Savings and Growth?,"
012, Bavarian Graduate Program in Economics (BGPE).
- Hans Fehr & Christian Habermann & Fabian Kindermann, 2008. "Tax-Favored Retirement Accounts: Are they Efficient in Increasing Savings and Growth?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 64(2), pages 171-198, June.
- Sang-Wook (Stanley) Cho & Renuka Sane, 2011.
"Means-Tested Age Pension and Homeownership: Is There a Link?,"
2011-02, School of Economics, The University of New South Wales.
- Cho, Sang-Wook (Stanley) & Sane, Renuka, 2013. "Means-Tested Age Pensions And Homeownership: Is There A Link?," Macroeconomic Dynamics, Cambridge University Press, vol. 17(06), pages 1281-1310, September.
- E. Paul Durrenberger, 2005. "Labour," Chapters, in: A Handbook of Economic Anthropology, chapter 8 Edward Elgar Publishing.
- Mariano Kulish & Kathryn Smith & Christopher Kent, 2006.
"Ageing, Retirement and Savings: A General Equilibrium Analysis,"
RBA Research Discussion Papers
rdp2006-06, Reserve Bank of Australia.
- Kulish Mariano & Kent Christopher & Smith Kathryn, 2010. "Aging, Retirement, and Savings: A General Equilibrium Analysis," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-32, July.
- Kingston, G. & Piggott, J., 1993.
"A Ricardian Equivalence Theorem on the Taxation of Pension Funds,"
93-4, New South Wales - School of Economics.
- Kingston, Geoffrey & Piggott, John, 1993. "A Ricardian Equivalence Theorem on the taxation of pension funds," Economics Letters, Elsevier, vol. 42(4), pages 399-403.
- Suzanne Doyle & Geoffrey Kingston & John Piggott, 1999. "Taxing Super," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(3), pages 207-218.
- David Altig, 2001. "Simulating Fundamental Tax Reform in the United States," American Economic Review, American Economic Association, vol. 91(3), pages 574-595, June.
- George Kudrna & Alan D. Woodland, 2011. "Implications of the 2009 Age Pension Reform in Australia: A Dynamic General Equilibrium Analysis," The Economic Record, The Economic Society of Australia, vol. 87(277), pages 183-201, 06.
- Nishiyama, Shinichi, 2011. "The budgetary and welfare effects of tax-deferred retirement saving accounts," Journal of Public Economics, Elsevier, vol. 95(11), pages 1561-1578.
- Fehr, Hans, 2000.
" Pension Reform during the Demographic Transition,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 102(3), pages 419-43, June.
- Tran, Chung & Woodland, Alan, 2014.
"Trade-offs in means tested pension design,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 47(C), pages 72-93.
- Chung Tran & Alan Woodland, 2011. "Trade-Offs in Means Tested Pension Design," ANU Working Papers in Economics and Econometrics 2011-550, Australian National University, College of Business and Economics, School of Economics.
- Chung Tran & Alan Woodland, 2011. "Trade-Offs in Means Tested Pension Design," Working Papers 201110, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.
- Jocelyn Horne, 2002. "Taxation of Superannuation in Australia: An Assessment of Reform Proposals," Research Papers 0212, Macquarie University, Department of Economics.
- Margaret E. Atkinson & John Creedy & David M. Knox, 1999. "Some implications of changing the tax basis for pension funds," Fiscal Studies, Institute for Fiscal Studies, vol. 20(2), pages 189-203, June.
When requesting a correction, please mention this item's handle: RePEc:asb:wpaper:201209. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elena Capatina)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.