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Macroeconomic Effects of Social Security and Tax Reform in the United States
Author:
Mr. Tamim Bayoumi
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,
Mr. Dennis P Botman
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Mr. Manmohan S. Kumar
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Series:
IMF Working Papers
Volume/Issue:
Volume 2005: Issue 208
Language:
English
Publication Date:
01 Nov 2005
DOI:
https://doi.org/10.5089/9781451862270.001
ISBN:
9781451862270
ISSN:
1018-5941
Pages:
22
Keywords:
WP; income tax; personal income; tax reform; tax; Introducing PRAs; Personal retirement accounts; fiscal consolidation; global fiscal model; labor income tax base; consolidation yield; personal income taxation; reform in the United States; personal income tax base; taxation of capital; personal income taxation of capital; tax reform in the United States; Labor taxes; Personal income tax; Real interest rates; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We use the IMF's Global Fiscal Model to evaluate recent proposals to reform social security and the tax system in the United States. Introducing personal retirement accounts is unlikely to yield significant macroeconomic benefits unless it spurs additional fiscal consolidation to prevent a large increase in government debt. Similar benefits are obtained if the social security surplus is placed in a lockbox while maintaining the same debt target. Lowering the taxation of investment income is beneficial, but only if the reform is revenue neutral. Debtneutral social security and tax reform in the United States has large positive effects on the rest of the world.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund