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Do Mobile Pensioners Threaten the Deferred Taxation of Savings?

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  • Volker Meier

    ()

  • Andreas Wagener

Abstract

We investigate optimal taxation of lifetime income with and without an emigration option during old age. The government sets the rates of deferred taxation and of possibly reduced taxation of interest. If agents are immobile, the optimal policy consists in full deferral of income taxes on savings and a full taxation of interest. Mobility of the old calls for lower degrees of deferral and reduced taxation of interest. However, the optimum never entails full immediate taxation of savings in combination with full tax exemption on capital income.

Suggested Citation

  • Volker Meier & Andreas Wagener, 2011. "Do Mobile Pensioners Threaten the Deferred Taxation of Savings?," CESifo Working Paper Series 3617, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_3617
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp3617.pdf
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    References listed on IDEAS

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    1. Cremer, Helmuth & Pestieau, Pierre & Rochet, Jean-Charles, 2003. "Capital income taxation when inherited wealth is not observable," Journal of Public Economics, Elsevier, vol. 87(11), pages 2475-2490, October.
    2. Grochulski, Borys & Piskorski, Tomasz, 2010. "Risky human capital and deferred capital income taxation," Journal of Economic Theory, Elsevier, vol. 145(3), pages 908-943, May.
    3. Atkinson, A B & Sandmo, A, 1980. "Welfare Implications of the Taxation of Savings," Economic Journal, Royal Economic Society, vol. 90(359), pages 529-549, September.
    4. Judd, Kenneth L., 1985. "Redistributive taxation in a simple perfect foresight model," Journal of Public Economics, Elsevier, vol. 28(1), pages 59-83, October.
    5. Blumkin, Tomer & Sadka, Efraim, 2004. "Estate taxation with intended and accidental bequests," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 1-21, January.
    6. John Burbidge, 2004. "Tax-deferred savings plans and interest deductibility," Canadian Journal of Economics, Canadian Economics Association, vol. 37(3), pages 757-767, August.
    7. David F. Bradford, 2000. "Taxation, Wealth, and Saving," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262024705, January.
    8. Chamley, Christophe, 1986. "Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives," Econometrica, Econometric Society, vol. 54(3), pages 607-622, May.
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    Cited by:

    1. repec:ces:ifodic:v:13:y:2015:i:3:p:19173875 is not listed on IDEAS
    2. Angela Xu, 2015. "Pension Taxation in the EU: A Concern for Mobile Pensioners?," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(3), pages 75-77, October.
    3. Robert Holzmann, 2016. "Taxing Pensions of an Internationally Mobile Labor Force: Portability Issues and Taxation Options," CESifo Working Paper Series 5715, CESifo Group Munich.

    More about this item

    Keywords

    deferred taxation; income tax; savings; migration;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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