Long-Run Effects of Social Security Reform Proposals on Lifetime Progressivity

Julia Lynn Coronado, Don Fullerton and Thoma Glass

in The Distributional Aspects of Social Security and Social Security Reform

Published by University of Chicago Press

Published in print June 2002 | ISBN: 9780226241067
Published online February 2013 | e-ISBN: 9780226241890 | DOI:
Long-Run Effects of Social Security Reform Proposals on Lifetime Progressivity

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This chapter employs the Panel Study of Income Dynamics to produce estimates of lifetime incomes for a large sample of individuals, and then calculates the present value of taxes and benefits for each person. The Social Security system takes taxes from both a high-wage person and a low-wage person during working years, and it provides benefits to both individuals when retired. It is noted that the choice of rate affects the absolute size of the present value gains or loss for each group, as well as the pattern of progressivity. In the model presented, the impacts of the Feldstein-Samwick plan are the opposite of the influences of the current Social Security system. The pattern of progressivity is impacted by alternative assumptions, but it is affected in similar ways for the current system and proposed reforms.

Keywords: Social Security system; progressivity; Panel Study of Income Dynamics; reforms; lifetime incomes; taxes; Feldstein-Samwick plan

Chapter.  23131 words.  Illustrated.

Subjects: Public Economics

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