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Tax–Benefit Linkages in Pension Systems: A Note
Author(s) -
Bütler Monika
Publication year - 2002
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/1467-9779.00105
Subject(s) - linkage (software) , economics , pension , statutory law , tax rate , constant (computer programming) , tax reform , monetary economics , public economics , microeconomics , finance , computer science , chemistry , biochemistry , political science , law , gene , programming language
This note shows that a public pension system with a fairly general individual tax–benefit linkage is (computationally) equivalent to a system without linkages. The “equivalent” pension system without linkages not only facilitates simulations of policy experiments but also offers some insight into the implied tax structure of the tax–benefit linkage. It is shown that implicit tax rates may differ considerably across age groups even if the statutory tax rate is constant over the life‐cycle.