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AUSTRALIAN EARLY RETIREMENT TAX BIASES PRIOR TO JULY 2007 AND THE LIKELY EFFECTS OF TAX REFORM ON RETIREMENT PLANS
Author(s) -
FELMINGHAM BRUCE,
JACKSON NATALIE,
WALTER MAGGIE,
YAN YONG HONG
Publication year - 2008
Publication title -
economic papers: a journal of applied economics and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.245
H-Index - 19
eISSN - 1759-3441
pISSN - 0812-0439
DOI - 10.1111/j.1759-3441.2008.tb01041.x
Subject(s) - accrual , economics , demographic economics , work (physics) , health and retirement study , tax reform , tax credit , tax rate , labour economics , public economics , monetary economics , finance , earnings , medicine , gerontology , mechanical engineering , engineering
We develop a simulation model explaining the accrual of retirement wealth gained from working one year beyond retirement and from this calculate an implicit tax rate on the additional year's work. We find that the pre‐July 2007 Australian tax on retirement benefits was biased in favour of ages 59 and less, while the implicit rate was positive on retirement past 59. We also use the results of a national survey of 2,500 households (ASRAM SURVEY) to determine the likely response to the tax changes implemented in July 2007 and find that half those sampled are either very likely or likely to change their expected retirement dates in response to the tax changes.