اثرات بودجه ای و آسایش از حساب های پس انداز بازنشستگی مالیات معوق

The present paper analyzes the budgetary, macroeconomic, and welfare effects of tax-deferred retirement saving accounts, similar to U.S. 401(k) plans, in a dynamic general-equilibrium overlapping-generations economy with heterogeneous households. Because of the initial deferral of tax payments, the short-run budgetary cost of tax-deferred accounts is significantly higher than the long-run cost. Therefore, the budget-neutral introduction of tax-deferred accounts would make current and near-future households worse off, although it would increase national wealth and total output in the long run. If the government spread the short-run cost to future households by increasing debt, the policy change could make all age cohorts, on average, as well off as the economy without tax-deferred accounts. Due to increased government debt and debt service costs, however, national wealth and total output would decrease in the long run. Thus, introducing tax-deferred accounts would not increase national wealth and improve social welfare at the same time. This is partly because the policy change is regressive and reduces the risk sharing effect of the current income tax system.

Tax-deferred retirement saving accounts, such as U.S. 401(k) plans and individual retirement accounts (IRAs), are designed to provide a sizable positive effect on household savings, and thus aggregate wealth accumulation, through tax-favored properties. Yet, few papers have analyzed the budgetary cost and the welfare effect of introducing these accounts. Like most other government programs, tax-deferred accounts are not self-financing. Although we can expect additional tax revenue from increased economic activity, a large percentage of tax benefits households receive from these accounts must be financed eventually by either cutting government expenditure or increasing other tax revenue. In addition, the short-run budgetary cost of newly introduced or expanded tax-deferred accounts is much higher than the long-run cost. Because, at the beginning of the policy change, many working-age households contribute to tax-deferred accounts (and pay less taxes), but few retired households withdraw their money from these accounts (and pay more taxes). Therefore, without considering the budgetary cost and the government financing, we cannot fully evaluate the effects of tax-deferred accounts on the overall economy. The present paper analyzes the budgetary, macroeconomic, and welfare effects of introducing tax-deferred accounts, similar to U.S. 401(k) plans, by extending a standard dynamic general-equilibrium overlapping-generations (OLG) growth model with heterogeneous agents. Households in the model economy are heterogeneous with respect to age, working ability, and asset holdings in regular taxable accounts and tax-deferred accounts. In this economy, households receive idiosyncratic working ability shocks each year and choose consumption, labor supply, and savings in these two accounts to maximize their expected lifetime utility. Introducing stylized 401(k)-type tax-deferred accounts to the economy, the present paper solves the model for an equilibrium transition path to evaluate both the short-run and the long-run effects of tax-deferred accounts across time and age cohorts. The stylized tax-deferred retirement saving accounts analyzed in the present paper have the following properties. Contributions to the tax-deferred accounts are income-tax deductible, capital income generated in the accounts is not taxable, and withdrawals from the accounts are all income taxable. Annual contributions are capped by the contribution limit and labor income, whichever is smaller. There are 10% early withdrawal penalties if households are aged 59 or younger.1 Thus, from the households’ point of view, the main advantage of tax-deferred accounts is the reduction of lifetime income-tax burden through deferring tax payments and smoothing taxable income (or equivalently, smoothing marginal income tax rates). First, deferring tax payments decreases the present value of lifetime tax payments for newborn households even if government tax revenue in each period is unchanged. Second, when the income tax schedule is progressive, smoothing taxable income over the life cycle reduces lifetime income tax payments, since marginal tax rates are higher when households are working and lower when households are retired.2 The main disadvantage of tax-deferred accounts is lower liquidity due to early withdrawal penalties. Therefore, to analyze these positive and negative effects, the model economy has to be equipped with heterogeneous households, idiosyncratic wage shocks, a progressive income tax, and liquidity constraints.3 The previous empirical literature mainly estimates how much tax-deferred retirement saving accounts increase national saving. More specifically, these papers estimate what percentage of tax-deferred saving is new saving rather than a replacement of other traditional saving. For example, Venti and Wise (1990) estimate the parameters of their static utility maximization model by using the Consumer Expenditure Survey (CEX) data and show that the vast majority of IRA contributions represent net new saving. Gale and Scholz (1994) estimate their dynamic utility maximization model by using the Survey of Consumer Finances (SCF) data and show that raising the annual IRA contribution limit would have resulted in little, if any, increase in national saving. Poterba et al. (1995) use the Survey of Income and Program Participation (SIPP) data, compare the other financial assets of 401(k) eligible families and non-eligible families, controlling the other heterogeneity, and find little evidence that 401(k) contributions substitute for other forms of personal saving. Attanasio and DeLeire (2002) test the changes in financial assets and consumption of new IRA contributers and continuing IRA contributors by using the CEX data, and they find that households financed their IRA contributions from existing savings or from saving that would have been done anyway, and at most 9% of IRA contributions represented net additions to national saving. Also, Benjamin (2003) uses the SIPP data and finds that about one quarter of 401(k) balances represent new national savings, one quarter is foregone tax revenue, another one quarter is conversions from pre-existing DC plans or foregone DB assets, and the remaining quarter represents substitution from other household assets. Since predictions on the net saving effect of tax-deferred accounts differ widely in the empirical literature, it becomes more important to construct a life cycle model and check how households of different age, income, and wealth would change their saving behavior when tax-deferred accounts were newly introduced. To the best of my knowledge, İmrohoroğlu et al. (1998) are the first to numerically analyze the long-run effect of tax-deferred accounts on individual saving and national wealth by using a dynamic general-equilibrium OLG model with heterogeneous agents. They show that approximately 9% of IRA contributions constitute incremental saving. Their model with a flat income tax also suggests that the effect of tax-deferred accounts would likely be small, because these accounts do not affect the rate of return on incremental saving for households whose originally-intended saving was above the annual contribution limit of tax-deferred accounts. This is not necessarily the case in an economy with a progressive income tax, however. The first-order conditions of the household's optimization problem in Appendix A imply the following effects of tax-deferred accounts: households save more by the direct marginal effect if the originally-intended saving is below the contribution limit; in addition, any contributions to the tax-deferred accounts possibly reduce the marginal labor income tax rate and increase the ratio of consumption to leisure; and any future contributions possibly reduce the future marginal capital income tax rate and increase current saving in regular taxable accounts. For this reason, it is important to assume endogenous labor supply and a progressive income tax system in the model economy. More recently, Kitao (2010) extends İmrohoroğlu et al. (1998) by introducing endogenous labor supply, idiosyncratic wage shocks, and a progressive income tax, and Ho (2011) in addition considers 401(k) eligibility shocks that are correlated to the wage shocks in his heterogeneous-agent OLG model. The primary contribution of the present paper relative to the previous dynamic general-equilibrium literature is that this paper solves the model economy for an equilibrium transition path and analyzes both the short-run and long-run effects of introducing tax-deferred accounts. This is very important for the policy assessment because tax-deferred accounts change the timing of tax payments of households over the life cycle.4 With the initial deferral of tax payments, the short-run cost of introducing tax-deferred accounts is significantly higher than the long-run cost, and the government has to finance this additional cost eventually. The present paper first calibrates the heterogeneous-agent OLG model to the U.S. economy without tax-deferred retirement saving accounts. Then, this paper introduces the stylized tax-deferred accounts described above to the economy, solves the model for equilibrium transition paths under four different government financing assumptions, and evaluates the policy effects on the government budget, macroeconomic variables, and social welfare both in the short run and in the long run. Since tax-deferred accounts are costly for the government, the individual and macroeconomic effects depend on how and when the government finances the cost of introducing these accounts. To close the government intertemporal budget constraint, the present paper makes the following four assumptions: cutting the government's transfer payments to households uniformly to balance the budget each year (Run 1), increasing marginal income tax rates proportionally each year (Run 2), increasing marginal income tax rates once at the time of policy change and increasing government debt gradually (Run 3), or increasing marginal income tax rates 10 years after the policy change and increasing government debt gradually (Run 4). The main findings from the policy experiments are as follows. If the government uniformly cut transfer payments to households each year to balance the budget, the policy change would increase both national wealth and total output throughout the transition path, but it would make all age cohorts, on average, worse off. The overall welfare level would be lowered because the policy change reduces the progressiveness of the current individual income tax and weaken its risk-sharing effect. If the government proportionally increased marginal income tax rates each year instead, national wealth and total output would decrease and current households would be worse off in the short run, although both wealth and output would increase and future households would be better off in the long run. Then, the question is whether the policy change could make both current and future households, on average, better off by issuing government bonds and spreading the transition cost to future households. If the government increased marginal income tax rates just once 10 years after the policy change and increased its debt gradually, welfare effects on all age cohorts would be close to zero, i.e., both current and future households could be, on average, as well off as the baseline economy without tax-deferred accounts. However, national wealth and total output would increase during the first 10 years but decrease thereafter. These numerical results will not change significantly in the economies with alternative parameter values. Even in an economy with myopic households, introducing tax-deferred accounts will fail to increase national wealth and improve social welfare at the same time. This policy implication might be surprising at first, because tax-deferred retirement saving accounts are designed to increase private saving by reducing effective capital income tax rates. Yet, the negative welfare effect of tax-deferred accounts comes from the regressiveness of the policy change. The policy change is more favorable to high-income households than low-income households, especially when the income tax is progressive. Actually, we have seen similar policy implications in the analyses of capital income taxes. For example, Domeij and Heathcote (2004) find that most households expect large welfare losses from capital income tax cuts when households are heterogeneous. When the capital income tax rate is reduced to zero, the average welfare loss in their benchmark economy is 1.4% in a consumption equivalence measure. Using a heterogeneous-agent OLG model, Conesa et al. (2009) also find that the optimal capital income tax rate in the United States is about 36%. Regarding the net saving effect of tax-deferred accounts, the predicted effect depends significantly on the government financing assumption. Cutting transfer payments increases private saving more than increasing marginal income tax rates. Deficit financing with a future tax increase increases short-run private savings but suppresses long-run national savings. The increase in national wealth as a percentage of the increase in tax-deferred wealth would be between − 5.1% and 12.6%, depending on the financing assumption, 10 years after the policy change and between − 2.1% and 14.9% in the long run. These numerical results are in accordance with those estimates by Gale and Scholz, 1994, İmrohoroğlu et al., 1998 and Attanasio and DeLeire, 2002. The rest of the paper is laid out as follows: Section 2 describes the heterogeneous-agent overlapping-generations model with taxable and tax-deferred retirement saving accounts, Section 3 shows the calibration of the baseline economy, Section 4 explains the effects of introducing 401(k) type tax-deferred accounts to the economy, Section 5 checks the robustness of the results in alternative economies, and Section 6 concludes the paper. Appendix A explains the computational algorithms to solve the household optimization problem and the overall model economy for an equilibrium transition path.

The policy analysis in the heterogeneous-agent OLG economy shows that the budgetary cost of introducing 401(k)-type tax-deferred accounts to the economy is significant, especially in the short run. If the government cut transfer payments each year to balance the budget, the policy change would hurt both current and future households, although national wealth and total output would increase throughout the transition path. If the government increased marginal income tax rates each year instead, national wealth and total output would decrease, and current households would be worse off in the short run, although future households could be better off in the long run. Finally, if the government shifted the short-run budgetary cost to future households by increasing debt, the welfare effects on all age cohorts would be close to zero, but national wealth and total output would decrease in the long run. The net long-run saving effect would be at most 15% and possibly negative, depending on the financing assumption. As emphasized in Ho (2011), introducing tax-deferred retirement saving accounts with cutting transfer payments (Run 1) has an effect that is similar to replacing part of the progressive income tax with a flat consumption tax. Both policy changes defer tax payments on labor income from the years households earn to the years they consume, reduce tax payments on capital income, and flatten the progressive income tax schedule. Table 7 shows the result when the consumption tax rate is increased by 5 percentage points and marginal income tax rates are cut each year to balance the budget (Run 9). In both policy experiments, Run 1 and Run 9, capital stock, labor supply, and total output would increase throughout the transition path. Private consumption would also increase in the medium and long run. Nevertheless, all current and future age cohorts would be, on average, worse off by the policy changes. This is because both of these policy changes would reduce the progressivity of the current income tax system and decrease the risk sharing of households.It is not clear why the U.S. government introduced 401(k) plans in the 1980s and expanded the annual contribution limit in the 2000s, despite that the budgetary cost is sizable and the welfare effect is possibly negative, according to the analysis in the present paper. These policy changes were accompanied by other large-scale tax cuts—the Economic Recovery Tax Act (1981), the Tax Reform Act (1986), and the Economic Growth and Tax Relief Reconciliation Act (2001). With marginal income tax rate cuts and other tax cuts, the government might have been more optimistic about the net saving effect and the overall growth effect of tax-deferred retirement saving accounts. Indeed the early empirical literature is, in general, more favorable to tax-deferred accounts than the present paper. In addition, it was probably difficult for the government to estimate the budgetary and welfare effects of the policy change by assuming heterogeneity of households with income uncertainty. In a simpler deterministic model economy with representative households, the growth and welfare effects would be much stronger. The heterogeneous-agent OLG model developed in the present paper is fairly detailed. Yet, to use this model for the government's official cost estimate of tax-deferred accounts, we need to make a few more refinements to the model economy. First, the present paper assumes that all households are eligible for tax-deferred accounts immediately after the policy change. According to Purcell (2009), however, only 66% of full-time workers and 36% of part-time workers in the U.S. were offered a retirement plan at work in 2007, though all taxpayers were still eligible for IRAs. Thus, the projected percentage of the firms that would offer a 401(k)-type plan must be considered for more accurate predictions. Ho (2011) addresses this issue in his dynamic-general equilibrium analysis. If the eligibility and the wage rate are correlated, however, the negative welfare effects of tax-deferred accounts would likely be worse due to stronger regressiveness. Second, the present paper abstracts from other tax-deferred and tax-favored assets in the U.S. economy, such as real estate, life insurance, and defined-benefit pension plans. With other tax-favored investment opportunities, households would contribute less to 401(k)-type accounts than what the model predicted. Table 8 compares the average retirement account balances in the model economy and in the U.S. data. The average balances in the model economy are those in the long run, and the balances in Purcell (2009) are those of households with any retirement accounts (including IRAs) and calculated from the 2007 SCF. The relatively large difference between the model prediction and the data for households aged 35–54 implies that housing investments are probably important to analyze the wealth accumulation of households. However, introducing additional assets to the model is computationally demanding and left for future research.