Research Report Flattening Tax Incentives for Retirement Saving
Barbara Butrica, Benjamin H. Harris, Pamela Perun, C. Eugene Steuerle
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Under current law, a large share of tax benefits for retirement saving accrues to high-income employees. We simulate the short- and long-term effect of three policy options for flattening tax incentives and increasing retirement savings for low- and middle-income workers. Our results show that reducing 401(k) contribution limits increases taxes for high-income taxpayers; expanding the saver's credit raises saving incentives and lower taxes for low- and middle-income taxpayers; and replacing the exclusion for retirement saving contributions with a 25 percent refundable credit benefits primarily low- and middle-income taxpayers, and raises taxes and reduces retirement assets for high-income taxpayers.
Research Areas Economic mobility and inequality Wealth and financial well-being Aging and retirement
Tags Economic well-being Asset and debts Pensions Income and wealth distribution Opportunity and ownership Retirement policy Financial stability
Policy Centers Urban-Brookings Tax Policy Center