Research Report The Implicit Tax on Work at Older Ages
Barbara Butrica, Richard W. Johnson, Karen E. Smith, C. Eugene Steuerle
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Encouraging work at older ages is a crucial policy goal for an aging society, but many features of the benefits and tax system discourage work. This study computes the implicit tax rate on work at older ages, broadly defined to include standard income and payroll taxes as well as changes in future Social Security benefits, employer-provided pension benefits, and health benefits associated with an additional year of employment. The results show that the implicit tax rate on work increases rapidly with age, rising from 14 percent at age 55 for a typical man to nearly 50 percent at age 70.
Research Areas Economic mobility and inequality Wealth and financial well-being Aging and retirement Taxes and budgets
Tags Economic well-being Pensions Wages and nonwage compensation Individual taxes Income and wealth distribution Retirement policy Wages and economic mobility
Policy Centers Income and Benefits Policy Center