1 An Income Tax, Not A Wage Tax: Comments on “A Fair and Simple Tax System for Our Future” Peter R. Orszag Co-Director, Tax Policy Center January 31, 2005.

Slides:



Advertisements
Similar presentations
Protecting the Poor With a Carbon Tax Gilbert E. Metcalf Department of Economics Tufts University Friedrich Ebert Foundation Financing for Development.
Advertisements

1 Improving the Tax Treatment of Health Insurance Katherine Baicker Professor of Health Economics Harvard School of Public Health.
Teleconference 2 1.Guest speakers in May 2.Policy Brief Project The Employer and Health Insurance.
The Flat Tax and the X-Tax Presentation to the Tax Reform Panel Robert E. Hall Hoover Institution May 11, 2005.
Indicators of Saving Earned Income Tax Credit Recipients in the Twin Cities of Minnesota Leo T. Gabriel Associate Professor of Business Bethel University.
1 A Progressive System of Mark-to-Market Taxation President’s Advisory Panel on Federal Tax Reform May 11, 2005 David S. Miller.
Comments on Cogan and Furman Emmett Keeler February 29, 2008.
CANADIAN CENTRE FOR POLICY ALTERNATIVES. LYNNE FERNANDEZ.
Five Debates over Macroeconomic Policy
Social Security and Unemployment Insurance. Why do we care? SS is one of largest government programs SS is one of largest government programs Important.
Making Taxes Work Presented by Jon Forman at: Law, Society, and Taxation I: What is Tax Reform? Law and Society Association Annual Meeting July 7, 2006.
Copyright©2004 South-Western 12 The Design of the Tax System.
Amounts and Accounts: Reforming Private Pension Enrolment Carl Emmerson and Matthew Wakefield Institute for Fiscal Studies © Institute for Fiscal Studies.
Poverty: Facts, Causes and Consequences Hilary Hoynes University of California, Davis California Symposium on Poverty October 2009.
Chapter 6: Health Insurance Chapter 6 Health Insurance Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
Chapter 33: Taxes: Equity versus Efficiency Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 13e.
Unemployment Insurance, Disability Insurance, and Workers’ Compensation Chapter 14 Unemployment insurance, workers’ compensation, and disability insurance.
Pearson Education, Inc., Longman © 2006 Chapter 13 Economic Policymaking American Government: Policy & Politics, Eighth Edition TANNAHILL.
11/27/2007 Pension Reforms in China and Taiwan Hongxia Jiao Yi-Ying Chen.
Minimizing the Pain of Federal Climate Legislation Jennifer Kefer Senior Climate Advisor Center on Budget and Policy Priorities
Rethinking Pension Reform: Ten Myths about Social Security Systems Peter R. Orszag (Sebago Associates, Inc.) Joseph E. Stiglitz (The World Bank)
UPSIDE DOWN: The $400 Billion Federal Asset Building Budget Ida Rademacher, CFED Jillien Meier, Annie E. Casey Foundation September 23, 2010.
© 2007 Thomson South-Western. “In this world nothing is certain but death and taxes.”... Benjamin Franklin Taxes paid in Ben Franklin’s.
Chapter 6, Section 3 Fairness in Taxes Part 1: Fairness & Tax Structures Part 2: Calculating Taxes Part 3: What is a Fair Tax Policy? Mr. Vasu – Honors.
Taxes and Public Policy. Role of Government Provide society with a set of public goods and services. Provide society with a set of public goods and services.
Public Finance (2)1 2 Economic effects of direct taxes The net income of workers will ________. Some workers will prefer _______ to work. Labour supply.
PENSIONS IN TRANSITION: United States and Japan Robert L. Clark Professor of Economics North Carolina State University 19 September, 2002.
Criteria for Evaluating Social Security Systems in Thailand By Estelle James.
McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved Taxes: Equity vs. Efficiency Chapter 33.
PERSONAL TAXATION AND BEHAVIOR Chapter 18. Labor Supply Hours of leisure per week Income per week 0T time endowment D |Slope| = w F G Leisure Work i ii.
A Fair and Simple Tax System for Our Future: A Progressive Approach to Tax Reform January 2005.
Distribution Tables Staff Presentation July 20, 2005.
Benefits v Tax The best method to solve inequality of poverty?
Tax Expenditures as Part of a Broad Strategy to Influence Saving May 19, 2009 William Gale.
The Brookings Institution, Washington, D.C. Individual Accounts, Social Security Reform, and Retirement Security Peter R. Orszag Joseph.
Savings and Investments Policy project Pension Taxation Proposals Charles McCready, TSIP Programme Director.
A Modern Corporate Tax Alan J. Auerbach University of California, Berkeley January 18, 2013.
Retirement Savings: What Can the U.S. Learn from Australia and Asia? Ben Harris Urban-Brookings Tax Policy Center September 17, 2013.
Class Discussion of Social Security Reform October 18, 2006.
Chapter 12: Low-Income Assistance Chapter 8 Income Taxes Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
Chapter 12 The Design of the Tax System. Objectives 2.) Understand the efficiency cost of taxation. 3.) Learn the criteria for evaluating the equity of.
ECON chapter 9 1. __________ affect the factors of production & therefore, resource allocation.
Chapter 12: Gross Domestic Product and Growth Section 3
How the EITC Refund Affects Eligibility for Public Benefits City of Laredo “Maximizing Federal Tax Benefits” Seminar January 20, 2005 Celia Hagert, Senior.
The Brookings Institution, Washington, D.C. Saving Social Security Peter R. Orszag Director, Retirement Security Project Joseph A. Pechman.
The Design of the Tax System Chapter 12. “ In this world nothing is certain but death and taxes. ”... Benjamin Franklin Taxes paid.
THE LINKS BETWEEN ECONOMIC AND SOCIAL POLICIES JOSÉ ANTONIO OCAMPO UNDER-SECRETARY GENERAL ECONOMIC AND SOCIAL AFFAIRS.
Taxes Chapter 12 Issues of Efficiency and Equity.
1 The Gender Impact of Pension Reform—What Is It and Why? By Estelle James.
20 CHAPTER Social Security PUBLIC SECTOR ECONOMICS: The Role of Government in the American Economy Randall Holcombe.
Tax-Related Retirement Reforms Taxation Laws Amendment Acts (TLAA) of 2013 and
National Transfer Accounts: Concepts and results for Chile Jorge Bravo, U.N. Population Division Mauricio Holz, ECLAC/CELADE Presentation at the Expert.
Impact of Social Security Reform on Labor Force Participation: Evidence from Chile Alejandra C. Edwards and Estelle James Presented at AEI, November 2009.
CHAPTER 18 Personal Taxation and Behavior Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
SUPPLY SIDE POLICIES YOUSIF AL ZAROUNI. WHAT ARE SUPPLY SIDE POLICIES? Supply side policies are policies designed to improve the supply side potential.
Political Economics Riccardo Puglisi Lecture 6 Content: An Overview of the Pension Systems Distinguish Features Economic and Political Explanation A Simple.
1 Political Economics Riccardo Puglisi Lecture 8 Content: The Future of Pension Systems: Demographic Dynamics A Complex Simulation Model Evaluating the.
OECD PENSIONS OUTLOOK 2014 HIGHLIGHTS 1 OECD. The financial and economic crisis: – reduction in government revenues to finance retirement promises and.
The Design of the Tax System 1. 2 Government Revenue as a Percentage of GDP This figure shows revenue of the federal government and of state and local.
Environmental Fiscal Reform (EFR) Sylvain Chevassus European Environmental Bureau Two perceived fears about ETR: competitiveness and income distribution.
12 The Design of the Tax System. “In this world nothing is certain but death and taxes.”... Benjamin Franklin Taxes paid in Ben Franklin’s.
Macroeconomic Policy Instruments Tools to achieve macroeconomic objectives.
Taxes: Equity vs. Efficiency
PERSONAL TAXATION AND BEHAVIOR
Wenliang Hou and Geoffrey T. Sanzenbacher
Lecture 25: IPE and War Benjamin Graham
Chapter 9 Section 1 I. Economic Impact of Taxes
PERSONAL TAXATION AND BEHAVIOR
Advancing gender wealth equity: Opportunities in the 2019 legislative session Liz Olson, state policy fellow March 21, 2019.
Comments on “How Accurate are Expected Retirement Savings?”
Presentation transcript:

1 An Income Tax, Not A Wage Tax: Comments on “A Fair and Simple Tax System for Our Future” Peter R. Orszag Co-Director, Tax Policy Center January 31, 2005

2 Moving back to an income tax Tax changes over past several years have been moving toward taxing only labor income, not capital income This proposal would move the system back toward a true income tax –1986 reform also moved in this direction, by reducing capital income preferences

3 Wage tax vs. consumption tax Consumption tax: Tax break only for new saving, not for existing capital –Imposes tax on existing assets and future wages (two sources of financing for consumption) Bulk of economic benefit from consumption tax derives from tax on existing assets Without tax on existing assets, result is simply a wage tax –All the regressivity of a consumption tax, little or none of the economic benefits

4 Using broad tax reform to boost saving: A flawed approach Aim of consumption/wage taxes: Boost new saving by reducing tax burden imposed on it Flaw: Especially at top of income distribution where bulk of tax benefit is provided, tax preferences generate little new saving –Asset shifting, not new saving –Regressive without significant beneficial impact on saving This proposal correctly moves in opposite direction

5 A better approach: Two key steps Make it easier to save –Evidence showing significant effects from automatic enrollment and automatic escalation (automatic 401k) Level the playing field for tax-preferred saving –Evidence that contributions made by lower-income workers more likely to be net addition to saving –Yet current system provides larger incentives to higher-income workers –Universal credit to level the playing field

6 Level the playing field $100 deposited by: Immediate tax saving under current system Immediate tax saving under CAP proposal High-income family $35$25 Middle-income family $15$25 Low-income family $0$25

7 Conclusions Among its many features, proposal highlights need to fundamentally re-think how we encourage private saving Represents very useful contribution to tax reform and retirement security debates