Research Report The Effects of the Economic Growth and Tax Relief Reconciliation Act of 2001 On Retirement Savings and Income Security
Subtitle
Final Report
Leonard E. Burman, William G. Gale, Matthew Hall
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This report examines the economic and distributional effects of changes made to retirement tax incentives by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). We augment the Tax Policy Center microsimulation tax model with information about saving from the Survey of Consumer Finances. Based on that model, we estimate that although EGTRRA provided some additional tax benefits for middle-income households, the benefits were skewed in favor of those with high incomes, and there were no benefits for those with low incomes. Better targeted policy options exist. We also estimate that when the effect on the deficit is considered, the policies are likely to reduce national saving by as much as 1 percent of GDP.
Research Areas Economic mobility and inequality Aging and retirement
Tags Fiscal policy Pensions Income and wealth distribution Retirement policy Financial stability
Policy Centers Income and Benefits Policy Center