1. Making Work Pay For the Elderly
Alan auerbacH, U.C. BERKELEY
LAURENCE KOTLIKOFF, BOSTON UNIVERSITY
Darryl Koehler, Economic Security Planning, Inc.

2. Older Americans Face a Plethora of Work Disincentives

3. America’s Plethora of Fiscal Work Disincentives and Incentives
Federal Income Tax Brackets Dividend and Cap Gains Taxes Alternative Minimum Tax Taxation of Social Security Benefits Medicare High-Income Asset Tax Medicare High-Income Earnings Taxes Phase Out of Deductions and Exemptions Federal Corporate Income Tax Federal Excise Taxes Federal Estate and Gift Tax Social Security FICA Tax Social Security Earnings Test SS Disability Benefit Loss SSI Benefit Loss Social Security Spousal, Widow(er), Divorced Spousal, Divorced Widow(er), Child Benefits Recomputation of Benefits Reduction Factor Adjustment Delayed Retirement Credits Medicare FICA Tax Medicare Part B Premiums Medicare Benefit Loss Obamacare Subsidies Food Stamps Earned Income Tax Credit SNAP State Income Taxes State Corp Income Taxes City Income Taxes State Sales Taxes State Estate Taxes Loss of Medicaid Benefits Loss of Medicaid’s Medicare Premium Payment TANF Generation Skipping Trusts Subsidy to Imputed Rent Charitable Deductions State/Local Tax Deductions

4. How Should We Calculate Net Marginal Tax Rates
How Should We Calculate Net Marginal Tax Rates?  C/  Y or  PVC/  PVR ? Current vs. Remaining Lifetime Marginal Net Tax Rates

5. Current vs. Remaining Lifetime Marginal Net Tax Rates
Economic Theory Is Clear. We Don’t Live For Just the Current Year. Nor Do We Spend All Our
Extra Earnings In Just the Current Year.
Key Question Is What Will We Get to Spend Smoothly Over the Rest of Our Lives If We Earn More Now?
The Term “Smoothly” Reflects the Assumption of Consumption Smoothing Subject to Borrowing Constraints.
Current-Year Marginal Net Tax Rates Tell Us About One Trade Off and Are Valid Only for
Infinitesimal Increases in Current Earnings.
Presented By Themselves, They Are Misleading. They Miss the Double Taxation of Earnings Associated with
Consumption Smoothing.

6. Calculating Remaining Lifetime Marginal Net Tax Rates (LMTRs)
Alan and I, Together With Darryl Koehler from My Software Company, Have Been Calculating LMTRs, which We’ve Reported In Several Papers Posted at
Calculation Method – Transform ESPlanner, My Company’s Lifetime Financial Planning Tool, which Does Consumption Smoothing Subject to Borrowing Constraints, Into The Fiscal Analyzer (TFA), which Adds Medicare, Medicaid, Food Stamps, TANF, Estate Taxation, and Corporate Taxation. TFA also Calculates Its LMTRs as Expectations Over Each Households’ Potential Survival Paths.
To Date, We Have Been Running the 2013 SCF Through TFA. We Are Gearing Up To Run the HRS Through TFA as Well. Our Analysis Tells Us Not Just About Work Disincentives Under Particular Fiscal Policies, But Also About Average Remaining Lifetime Net Tax Rates as Well as Inequality in Remaining Lifetime Spending.
Hence, We Can Do Intragenerational Accounting – Measuring Inequality Among Households of a Given Cohort and Determining How Much Fiscal Policy Is Mitigating Such Inequality.

7. 2015 Median Marginal Remaining Lifetime and Current-Year Net Tax Rates, Current Law for 40 Year Olds, by Quintiles and Percentiles

8. 2015 Median Marginal Remaining Lifetime and Current-Year Net Tax Rates, Unified Framework for 40 Year Olds, by Quintiles and Percentiles

9. 2015 Median Marginal Remaining Lifetime and Current-Year Net Tax Rates, Current Law for 60 Year Olds, by Quintiles and Percentiles

10. 2015 Median Marginal Remaining Lifetime and Current-Year Net Tax Rates, Unified Framework for 60 Year Olds, by Quintiles and Percentiles

11. 2015 Distribution of Marginal Remaining Lifetime Net Tax Rates, by Percentile Ranges of Remaining Resources, Ages 40-49, Current Law

12. 2015 Distribution of Marginal Remaining Lifetime Net Tax Rates, by Percentile Ranges of Remaining Resources, Ages 40-49, Unified Framework

13. 2015 Distribution of Marginal Remaining Lifetime Net Tax Rates, by Percentile Ranges of Remaining Resources, Ages 60-69, Current Law

14. 2015 Distribution of Marginal Remaining Lifetime Net Tax Rates, by Percentile Ranges of Remaining Resources, Ages 60-69, Unified Framework

15. 2015 Average Remaining Lifetime and Current-Year Net Tax Rates, Current Law for 40 Year Olds, by Quintiles and Percentiles

16. 2015 Average Remaining Lifetime and Current-Year Net Tax Rates, Unified Framework for 40 Year Olds, by Quintiles and Percentiles

17. 2015 Distribution of Wealth and Remaining Lifetime Spending, Current Law, for 40 Year Olds, by Quintiles and Percentiles

18. 2015 Distribution of Wealth and Remaining Lifetime Spending, Unified Framework, for 40 Year Olds, by Quintiles and Percentiles