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

Author

Listed:
  • Patricia M. Anderson
  • Bruce D. Meyer

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

  • Patricia M. Anderson & Bruce D. Meyer, 2005. "Unemployment Insurance Tax Burdens and Benefits: Funding Family Leave and Reforming the Payroll Tax," Working Papers 0601, Harris School of Public Policy Studies, University of Chicago.
    • Handle: RePEc:har:wpaper:0601
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    Cited by:

    1. is not listed on IDEAS
    2. Audrey Guo & Andrew C. Johnston, 2021. "The Finance of Unemployment Compensation and Its Consequences," Public Finance Review, , vol. 49(3), pages 392-434, May.
    3. Catalina Amuedo‐Dorantes & Jean Kimmel, 2009. "Moonlighting Over The Business Cycle," Economic Inquiry, Western Economic Association International, vol. 47(4), pages 754-765, October.
    4. 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.
    5. Amuedo-Dorantes, Catalina & Kimmel, Jean, 2005. "Moonlighting Behavior over the Business Cycle," IZA Discussion Papers 1671, IZA Network @ LISER.
    6. 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.
    7. 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

    Keywords

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    JEL classification:

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

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